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Bausch Health To Reduce Debt By $350 Million

PR Newswire

LAVAL, Quebec, Aug. 3, 2021 /PRNewswire/ — Bausch Health Companies Inc. (NYSE/TSX: BHC) (“Bausch Health” or the “Company”) today announced it will reduce debt by $350 million through the redemption of outstanding senior notes, using cash on hand and cash generated from operations.

Bausch Health will redeem $350 million aggregate principal amount of its outstanding 6.125% Senior Notes due 2025, CUSIP Nos. 91831A AC5, C96729 AC9 (the “Notes”) on Sept. 2, 2021. With the redemption announced today, the Company will have redeemed a total of $1.0 billion aggregate principal amount of debt in 2021 using cash on hand and cash generated from operations.

The Company will issue today an irrevocable notice of redemption for the Notes, and a copy will be issued to the record holders of such Notes. Nothing contained herein shall constitute a notice of redemption of the Notes. Payment of the redemption price and surrender of the Notes for redemption will be made through the facilities of the Depository Trust Company in accordance with the applicable procedures of the Depository Trust Company. The name and address of the paying agent are as follows: The Bank of New York Mellon; 111 Sanders Creek Parkway, East Syracuse, N.Y. 13057; Attn: Redemption Unit; Tel: 800-254-2826.

About Bausch Health
Bausch Health Companies Inc. (NYSE/TSX: BHC) is a global company whose mission is to improve people’s lives with our health care products. We develop, manufacture and market a range of pharmaceutical, medical device and over-the-counter products, primarily in the therapeutic areas of eye health, gastroenterology and dermatology. We are delivering on our commitments as we build an innovative company dedicated to advancing global health. For more information, visit www.bauschhealth.com and connect with us on Twitter and LinkedIn.

Caution Regarding Forward-Looking Information and “Safe Harbor” Statement
This news release may contain forward-looking statements, including, but not limited to, the redemption of the Notes. Forward-looking statements may generally be identified by the use of the words “anticipates,” “hopes,” “expects,” “intends,” “plans,” “should,” “could,” “would,” “may,” “will,” “believes,” “estimates,” “potential,” “target,” or “continue” and variations or similar expressions. These statements are based upon the current expectations and beliefs of management and are subject to certain risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties include, but are not limited to, risks and uncertainties discussed in the Company’s most recent annual and quarterly reports and detailed from time to time in the Company’s other filings with the Securities and Exchange Commission and the Canadian Securities Administrators, which factors are incorporated herein by reference. They also include, but are not limited to, risks and uncertainties caused by or relating to the evolving COVID-19 pandemic, and the fear of that pandemic and its potential effects, the severity, duration and future impact of which are highly uncertain and cannot be predicted, and which may have a material adverse impact on the Company, including but not limited to its supply chain, third-party suppliers, project development timelines, employee base, liquidity, stock price, financial condition and costs (which may increase) and revenue and margins (both of which may decrease). Readers are cautioned not to place undue reliance on any of these forward-looking statements. These forward-looking statements speak only as of the date hereof. Bausch Health undertakes no obligation to update any of these forward-looking statements to reflect events or circumstances after the date of this news release or to reflect actual outcomes, unless required by law.


Investor Contact:


Media Contact:

Arthur Shannon 

Lainie Keller


[email protected] 


[email protected]

(514) 856-3855

(908) 927-1198

(877) 281-6642 (toll free)    

 

 

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SOURCE Bausch Health Companies Inc.

Posted on

Restart of Operations at the Avino Mine

PR Newswire

VANCOUVER, BC, Aug. 3, 2021 /PRNewswire/ – Avino Silver & Gold Mines Ltd. (TSX: ASM) (NYSE American: ASM) (FSE: GV6), “Avino” or “the Company”) is pleased to announce that mining operations have restarted at its Avino Mine.

“We are extremely pleased to announce that mining operations have resumed at the Avino Mine,” said David Wolfin, President and CEO. “Over the last few months, our team has worked diligently as they prepared the mine-site for commencement of operational activities, which included hiring mine personnel and re-establishing the mill circuits.  During operational closure, there were a number of upgrades made to improve recoveries at the mill. With the current higher metal prices, we look forward to generating positive cash flow again. As one of the main employers in the area, the restart of operations will play a critical role for the local communities, and it was important to bring a local workforce back.”

Management expects throughput at the mill will ramp-up quickly to levels prior to shut down. In addition, we are infill-drilling the oxide tailings resource that sits within our tailings storage facility, as well as continuing the previously reported exploration drill program.

About Avino
Avino is primarily a silver producer from its wholly owned Avino Mine near Durango, Mexico. The Company’s silver and gold production remains unhedged. The Company’s mission and strategy is to create shareholder value through organic growth at the historic Avino Property and the strategic acquisition of mineral exploration and mining properties. We are committed to managing all business activities in a safe, environmentally responsible, and cost-effective manner, while contributing to the well-being of the communities in which we operate.

On Behalf of the Board

“David Wolfin“
________________________________

David Wolfin

President & CEO
Avino Silver & Gold Mines Ltd.

Safe Harbor Statement – This news release contains “forward-looking information” and “forward-looking statements” (together, the “forward looking statements”) within the meaning of applicable securities laws and the United States Private Securities Litigation Reform Act of 1995, including the updated mineral resource estimate for the Company’s Avino Property located near Durango in west-central Mexico (the “Property”) with an effective date of January 13, 2021 prepared for the Company.  Forward-looking statements are made as of the date of this news release and the dates of technical reports, as applicable. Readers are cautioned not to place undue reliance on forward-looking statements, as there can be no assurance that the future circumstances, outcomes, or results anticipated in or implied by such forward-looking statements will occur or that plans, intentions or expectations upon which the forward-looking statements are based will occur. While we have based these forward-looking statements on our expectations about future events as at the date that such statements were prepared, the statements are not a guarantee that such future events will occur and are subject to risks, uncertainties, assumptions, and other factors which could cause events or outcomes to differ materially from those expressed or implied by such forward-looking statements. No assurance can be given that the Company’s Property has the amount of the mineral resources indicated in the updated report or that such mineral resources may be economically extracted.

Such factors and assumptions include, among others, the effects of general economic conditions, the price of gold, silver, and copper, changing foreign exchange rates and actions by government authorities, uncertainties associated with legal proceedings and negotiations and misjudgments while preparing forward-looking information. In addition, there are known and unknown risk factors which could cause our actual results, performance, or achievements to differ materially from any future results, performance or achievements expressed or implied by the forward-looking statements. Known risk factors include risks associated with project development; the need for additional financing; operational risks associated with mining and mineral processing; the COVID-19 pandemic; volatility in the global financial markets; fluctuations in metal prices; title matters; uncertainties and risks related to carrying on business in foreign countries; environmental liability claims and insurance; reliance on key personnel; the potential for conflicts of interest among certain of our officers, directors or promoters with certain other projects; the absence of dividends; currency fluctuations; competition; dilution; the volatility of the our common share price and volume; tax consequences to U.S. investors; and other risks and uncertainties. Although we have attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. We are under no obligation to update or alter any forward-looking statements except as required under applicable securities laws. For more detailed information regarding the Company including its risk factors, investors are directed to the Company’s Annual Report on Form 20-F and other periodic reports that it files with the U.S. Securities and Exchange Commission.

References to Measured & Indicated Mineral Resources and Inferred Mineral Resources are terms that are defined under Canadian rules by National Instrument 43-101 (“NI 43-101”).  U.S. Investors are cautioned not to assume that any part of the mineral resources in these categories will ever be converted into Reserves as defined under SEC Industry Guide 7.

Cision View original content:https://www.prnewswire.com/news-releases/restart-of-operations-at-the-avino-mine-301345607.html

SOURCE Avino Silver & Gold Mines Ltd.

Posted on

nVent Electric plc Second Quarter 2021 Financial Results Available on Company’s Website

nVent Electric plc Second Quarter 2021 Financial Results Available on Company’s Website

LONDON–(BUSINESS WIRE)–
nVent Electric plc (NYSE:NVT) (“nVent”), a global leader in electrical connection and protection solutions, reported second quarter 2021 financial results today through an earnings release posted on the company’s Investor Relations website at http://investors.nvent.com. The earnings release will be furnished with the Securities and Exchange Commission on a Form 8-K and available here. The company will also hold a conference call with analysts and investors at 8:00 a.m. ET.

Conference Call and Webcast Details

The call can be accessed via webcast by following this link or by dialing 855-493-3495 or 720-405-2160 along with conference number 5753105. A replay of the conference call will be made accessible once it becomes available and will remain accessible through midnight on November 3, 2021 by dialing 855-859-2056 or 404-537-3406, along with the above conference number.

Related presentation materials are posted here.

ABOUT NVENT

nVent is a leading global provider of electrical connection and protection solutions. We believe our inventive electrical solutions enable safer systems and ensure a more secure world. We design, manufacture, market, install and service high performance products and solutions that connect and protect some of the world’s most sensitive equipment, buildings and critical processes. We offer a comprehensive range of enclosures, electrical connections and fastening and thermal management solutions across industry-leading brands that are recognized globally for quality, reliability and innovation. Our principal office is in London and our management office in the United States is in Minneapolis. Our robust portfolio of leading electrical product brands dates back more than 100 years and includes nVent CADDY, ERICO, HOFFMAN, RAYCHEM, SCHROFF and TRACER.

nVent, CADDY, ERICO, HOFFMAN, RAYCHEM, SCHROFF and TRACER are trademarks owned or licensed by nVent Services GmbH or its affiliates.

Investor Contact

J.C. Weigelt

Vice President, Investor Relations

nVent

763.204.7750

[email protected]

Media Contact

Stacey Wempen

Director of External Communications

nVent

763.204.7857

[email protected]

KEYWORDS: Europe United States United Kingdom North America Minnesota

INDUSTRY KEYWORDS: Utilities Hardware Energy Engineering Technology Semiconductor Manufacturing Security

MEDIA:

Posted on

Arconic Reports Second Quarter 2021 Results Demonstrating Profitability Growth and Near-Term Opportunities

Arconic Reports Second Quarter 2021 Results Demonstrating Profitability Growth and Near-Term Opportunities

Second Quarter 2021 Highlights

  • Sales of $1.8 billion, up 52% year over year, and up 8% from prior quarter
  • Net loss of $427 million, or $3.89 per share, compared with net loss of $96 million, or $0.88 per share, in second quarter 2020. Second quarter 2021 includes an after-tax charge of $423 million related to a partial annuitization of U.S. pension obligations
  • Adjusted EBITDA of $187 million, up 89% year over year, and up 4% from prior quarter. Adjusted EBITDA margin of 10.4%
  • Repurchased nearly 250,000 shares for approximately $9 million
  • Completed $1 billion partial annuitization of U.S. pension obligations
  • Strong financial profile creating a range of return-generating capital allocation opportunities

PITTSBURGH, Pa.–(BUSINESS WIRE)–
Arconic Corporation (NYSE: ARNC) (“Arconic” or “the Company”) today reported second quarter 2021 results. Revenue was $1.8 billion, up 8% from the prior quarter, primarily due to higher aluminum prices and growth in the industrial and packaging end markets partially offset by weakness in ground transportation. The Company reported a net loss of $427 million, or $3.89 per share, compared with a net loss of $96 million, or $0.88 per share, in second quarter 2020. The second quarter 2021 net loss includes an after-tax non-cash pension settlement charge of $423 million related to the partial annuitization of U.S. pension obligations completed in quarter.

Second quarter 2021 Adjusted EBITDA was $187 million, an increase of 89% year over year and 4% sequentially, driven primarily by continued strong operating performance and growth in industrial end markets and international packaging sales. Adjusted EBITDA margin was 10.4% in second quarter 2021. Cash used for operations was $167 million, reflecting $250 million of U.S. pension contributions made in April 2021 related to the partial U.S. pension annuitization. Capital expenditures were $44 million. At quarter-end, the cash balance was $540 million with total available liquidity of approximately $1.3 billion, and debt was $1.6 billion.

Tim Myers, Chief Executive Officer, said, “The broad-based strength of our product portfolio and our decision to pivot capacity served us well in the second quarter, enabling us to increase Adjusted EBITDA 4% sequentially. During the quarter, we shifted capacity from automotive to industrial to nearly offset semiconductor challenges affecting ground transportation. All other markets grew during the quarter benefiting from sustained tailwinds, and we expect ongoing growth across all of our end markets, setting the stage for Arconic to deliver meaningful Adjusted EBITDA growth over the next several years. Additionally, we have dramatically reduced our annual legacy cash obligations, which will lead to increased free cash flow generation and open the door to a range of return-generating capital allocation opportunities.”

Second Quarter Segment Performance
 

Revenue by Segment ($M)

Quarter ended

 

June 30, 2021

June 30, 2020

Rolled Products

$

1,474

 

$

880

Building and Construction Systems

257

230

Extrusions

 

70

 

81

 

Adjusted EBITDA ($M)

 

Quarter ended

 

June 30, 2021

June 30, 2020

Rolled Products

$

173

 

 

$

85

 

Building and Construction Systems

 

35

 

 

 

37

 

Extrusions

(8

)

(14

)

Subtotal

200

108

Corporate

(13

)

(9

)

Adjusted EBITDA

$

187

 

$

99

 

Outlook

The Company is updating its full-year 2021 outlook in light of the effects of increased metal price on revenue and working capital. Arconic now expects full-year 2021 revenue to be in a range of $7.3 billion to $7.6 billion, compared with the prior outlook of $7.1 billion to $7.4 billion. This assumes an average annual LME aluminum price of $2,330/mt and Midwest Premium of $540/mt for the full year, versus prior assumptions for LME of $2,200/mt and Midwest Premium of $430/mt. Adjusted EBITDA expectations for full-year 2021 remain in a range of $710 million to $750 million. Adjusted free cash flow outlook for full-year 2021 is now expected to be approximately $250 million compared to the prior outlook of $300 million to $400 million. Adjusted free cash flow outlook excludes a $250 million contribution to U.S. pension plans in April in connection with the $1 billion annuitization, and approximately $350 million in other funding of legacy pension, OPEB, and environmental liabilities.

Share Repurchase Program

The Company repurchased approximately 250,000 shares in second quarter 2021 at an average price of $34.68 for a total of approximately $9 million of the previously announced $300 million two-year authorization. From July 1, 2021 through July 30, 2021, the Company has bought back more than twice the amount of shares repurchased in second quarter 2021.

Pension Annuitization

As previously announced, the Company completed an approximately $1 billion partial annuitization of its U.S. pension obligations. To effect this transaction, Arconic transferred certain plan assets to the insurance company providing the group annuity contract and made an aggregate contribution of $250 million to its U.S. pension plans to maintain the funding level of the remaining plan obligations. As a result of the transaction, the Company recognized a non-cash pension settlement charge of $549 million ($423 million after tax), in the second quarter of 2021.

Arconic will hold its quarterly conference call at 10:00 AM Eastern Time on August 3, 2021, to present second quarter financial results. The call will be webcast on the Arconic website. Call information and related details are available at www.arconic.com under “Investors.”

About Arconic

Arconic Corporation (NYSE: ARNC), headquartered in Pittsburgh, Pennsylvania, is a leading provider of aluminum sheet, plate, and extrusions, as well as innovative architectural products, that advance the ground transportation, aerospace, building and construction, industrial and packaging end markets.

Dissemination of Company Information

Arconic intends to make future announcements regarding Company developments and financial performance through its website at www.arconic.com

Forward-Looking Statements

This release contains statements that relate to future events and expectations and, as such, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those containing such words as “anticipates,” “believes,” “could,” “estimates,” “expects,” “forecasts,” “goal,” “guidance,” “intends,” “may,” “outlook,” “plans,” “projects,” “seeks,” “sees,” “should,” “targets,” “will,” “would,” or other words of similar meaning. All statements that reflect Arconic’s expectations, assumptions, projections, beliefs or opinions about the future, other than statements of historical fact, are forward-looking statements, including, without limitation, statements, relating to the condition of, or trends or developments in, the ground transportation, aerospace, building and construction, industrial, packaging and other end markets; Arconic’s future financial results, operating performance, working capital, cash flows, liquidity and financial position; cost savings and restructuring programs; Arconic’s strategies, outlook, business and financial prospects; any future share repurchases; costs associated with pension and other post-retirement benefit plans; projected sources of cash flow; potential legal liability; the potential impact of the COVID-19 pandemic; the timing and levels of potential recovery from the COVID-19 pandemic within our end markets; and the impact of actions to mitigate the impact of the COVID-19 pandemic. These statements reflect beliefs and assumptions that are based on Arconic’s perception of historical trends, current conditions and expected future developments, as well as other factors Arconic believes are appropriate in the circumstances. Forward-looking statements are not guarantees of future performance, and actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks, uncertainties and changes in circumstances, many of which are beyond Arconic’s control. Such risks and uncertainties include, but are not limited to: (a) continuing uncertainty regarding the duration and impact of the COVID-19 pandemic on our business and the businesses of our customers and suppliers; (b) deterioration in global economic and financial market conditions generally; (c) unfavorable changes in the end markets we serve; (d) the inability to achieve the level of revenue growth, cash generation, cost savings, benefits of our management of legacy liabilities, improvement in profitability and margins, fiscal discipline, or strengthening of competitiveness and operations anticipated or targeted; (e) adverse changes in discount rates or investment returns on pension assets; (f) competition from new product offerings, disruptive technologies, industry consolidation or other developments; (g) the loss of significant customers or adverse changes in customers’ business or financial condition; (h) manufacturing difficulties or other issues that impact product performance, quality or safety; (i) the impact of pricing volatility in raw materials; (j) a significant downturn in the business or financial condition of a key supplier or other supply chain disruptions; (k) challenges to or infringements on our intellectual property rights; (l) the inability to successfully implement our re-entry into the U.S. packaging market or to realize the expected benefits of other strategic initiatives or projects; (m) the inability to identify or successfully respond to changing trends in our end markets; (n) the impact of potential cyber attacks and information technology or data security breaches; (o) geopolitical, economic, and regulatory risks relating to our global operations, including compliance with U.S. and foreign trade and tax laws, sanctions, embargoes and other regulations; (p) the outcome of contingencies, including legal proceedings, government or regulatory investigations, and environmental remediation and compliance matters; and (q) the other risk factors summarized in Arconic’s Form 10-K for the year ended December 31, 2020 and other reports filed with the U.S. Securities and Exchange Commission (SEC). The above list of factors is not exhaustive or necessarily in order of importance. Market projections are subject to the risks discussed above and in this release, and other risks in the market. The statements in this release are made as of the date of this release, even if subsequently made available by Arconic on its website or otherwise. Arconic disclaims any intention or obligation to update publicly any forward-looking statements, whether in response to new information, future events, or otherwise, except as required by applicable law.

Non-GAAP Financial Measures

Some of the information included in this release is derived from Arconic’s consolidated financial information but is not presented in Arconic’s financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). Certain of these financial measures are considered “non-GAAP financial measures” under SEC rules. These non-GAAP financial measures supplement our GAAP disclosures and should not be considered an alternative to any measure of performance or financial condition as determined in accordance with GAAP, and investors should consider Arconic’s performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of Arconic. Non-GAAP financial measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the results or financial condition as reported under GAAP. Non-GAAP financial measures presented by Arconic may not be comparable to non-GAAP financial measures presented by other companies. Reconciliations to the most directly comparable GAAP financial measures and management’s rationale for the use of the non-GAAP financial measures can be found in the schedules to this release.Arconic has not provided reconciliations of any forward-looking non-GAAP financial measures, such as adjusted EBITDA, free cash flow, and adjusted free cash flow, to the most directly comparable GAAP financial measures because such reconciliations are not available without unreasonable efforts due to the variability and complexity with respect to the charges and other components excluded from the non-GAAP measures, such as the effects of metal price lag, foreign currency movements, gains or losses on sales of assets, taxes, and any future restructuring or impairment charges. These reconciling items are in addition to the inherent variability already included in the GAAP measures, which includes, but is not limited to, price/mix and volume. Arconic believes such reconciliations would imply a degree of precision that would be confusing or misleading to investors.

Arconic Corporation and subsidiaries

Statement of Consolidated Operations (unaudited)

(dollars in millions, except per-share amounts)
 

 

Quarter ended

 

June 30,

 

March 31,

 

June 30,

 

2021

 

2021

 

2020

Sales

$

1,801

 

 

$

1,675

 

$

1,187

 

 

 

 

 

 

 

Cost of goods sold (exclusive of expenses below)(1)

 

1,567

 

 

 

1,431

 

 

1,051

 

Selling, general administrative, and other expenses

 

61

 

 

 

59

 

 

55

 

Research and development expenses

 

9

 

 

 

8

 

 

8

 

Provision for depreciation and amortization

 

62

 

 

 

63

 

 

68

 

Restructuring and other charges(2)

 

597

 

 

 

1

 

 

77

 

Operating (loss) income(1)

 

(495

)

 

 

113

 

 

(72

)

 

 

 

 

 

 

Interest expense(3)

 

25

 

 

 

23

 

 

40

 

Other expenses, net

 

15

 

 

 

22

 

 

16

 

 

 

 

 

 

 

(Loss) Income before income taxes(1)

 

(535

)

 

 

68

 

 

(128

)

(Benefit) Provision for income taxes(1)

 

(108

)

 

 

16

 

 

(32

)

 

 

 

 

 

 

Net (loss) income(1)

 

(427

)

 

 

52

 

 

(96

)

 

 

 

 

 

 

Less: Net income attributable to noncontrolling interest

 

–

 

 

 

–

 

 

–

 

 

 

 

 

 

 

NET (LOSS) INCOME ATTRIBUTABLE TO ARCONIC

CORPORATION(1)

 

$

 

(427

 

)

 

 

$

 

52

 

 

$

 

(96

 

)

 

 

 

 

 

 

EARNINGS PER SHARE ATTRIBUTABLE TO ARCONIC

CORPORATION COMMON STOCKHOLDERS:

 

 

 

 

 

Basic:

 

 

 

 

 

Net (loss) income(1)

$

(3.89

)

 

$

0.48

 

$

(0.88

)

Weighted-average number of shares

 

110,035,026

 

 

 

109,835,195

 

 

109,046,332

 

 

 

 

 

 

 

Diluted:

 

 

 

 

 

Net (loss) income(1)

$

(3.89

)

 

$

0.46

 

$

(0.88

)

Weighted-average number of shares(4)

 

110,035,026

 

 

 

113,249,380

 

 

109,046,332

 

 

 

 

 

 

 

 

 

 

 

 

 

COMMON STOCK OUTSTANDING AT THE END OF THE

PERIOD

 

 

 

110,024,144

 

 

 

 

 

 

110,024,144

 

 

 

 

109,058,691

 

 

 

 

 

 

(1)

Effective July 1, 2020, the Company changed its inventory cost method to average cost for all U.S. inventories previously carried at last-in, first-out (LIFO) cost. Management believes the average cost method more closely reflects the physical flow of inventories, improves comparability of the Company’s operating results with its industry peers, and provides an increased level of consistency in the measurement of inventories in the Company’s consolidated financial statements. The effects of the change in accounting principle from LIFO to average cost have been retrospectively applied to the Company’s Statement of Consolidated Operations for the quarter ended June 30, 2020. Accordingly, Net loss attributable to Arconic Corporation increased $4 (comprised of a $5 increase to Cost of goods sold and a $1 increase to Benefit for income taxes), or $0.04 per share, from the amount previously reported in the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2020 (filed on August 4, 2020). See the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 (filed on February 23, 2021) for additional information.

 

(2)

In the quarter ended June 30, 2021, Restructuring and other charges includes $568 related to the settlement of a portion of the Company’s U.S. defined benefit pension plan obligations as a result of the purchase of a group annuity contract and elections by certain plan participants to receive lump-sum benefit payments (see footnote 4 to the Consolidated Balance Sheet included in this release). In the quarter ended June 30, 2020, Restructuring and other charges includes $55 related to the settlement of a portion of the Company’s U.K. defined benefit pension plan obligation as a result of the purchase of a group annuity contract.

 

(3)

In the quarter ended June 30, 2020, Interest expense includes $19 related to the write-off and immediate expensing of certain debt issuance costs associated with a debt refinancing executed in May 2020.

 

(4)

For periods in which the Company generates net income, the diluted weighted-average number of shares include common share equivalents associated with outstanding employee stock awards. For periods in which the Company generates a net loss, the diluted weighted-average number of shares does not include any common share equivalents as their effect is anti-dilutive.

Arconic Corporation and subsidiaries

Consolidated Balance Sheet (unaudited)

(dollars in millions)
 

June 30,

 

December 31,

2021

 

2020

ASSETS

 

 

Current assets:

 

 

Cash and cash equivalents

$

540

 

$

787

 

Receivables from customers, less allowances of

$1 in both 2021 and 2020

 

828

 

 

631

 

Other receivables

 

190

 

 

128

 

Inventories

 

1,397

 

 

1,043

 

Prepaid expenses and other current assets

 

63

 

 

53

 

Total current assets

 

3,018

 

 

2,642

 

 

 

 

Properties, plants, and equipment

 

7,432

 

 

7,409

 

Less: accumulated depreciation and amortization

 

4,802

 

 

4,697

 

Properties, plants, and equipment, net

 

2,630

 

 

2,712

 

Goodwill

 

391

 

 

390

 

Operating lease right-of-use-assets

 

136

 

 

144

 

Deferred income taxes

 

273

 

 

329

 

Other noncurrent assets

 

95

 

 

97

 

Total assets

$

6,543

 

$

6,314

 

 

 

 

LIABILITIES

 

 

Current liabilities:

 

 

Accounts payable, trade

$

1,427

 

$

1,106

 

Accrued compensation and retirement costs

 

127

 

 

118

 

Taxes, including income taxes

 

42

 

 

33

 

Environmental remediation

 

75

 

 

90

 

Operating lease liabilities

 

36

 

 

36

 

Other current liabilities

 

143

 

 

90

 

Total current liabilities

 

1,850

 

 

1,473

 

Long-term debt(1)

 

1,593

 

 

1,278

 

Accrued pension benefits(2)

 

737

 

 

1,343

 

Accrued other postretirement benefits

 

459

 

 

479

 

Environmental remediation

 

60

 

 

66

 

Operating lease liabilities

 

103

 

 

111

 

Deferred income taxes

 

14

 

 

15

 

Other noncurrent liabilities and deferred credits

 

99

 

 

102

 

Total liabilities

 

4,915

 

 

4,867

 

 

 

 

EQUITY

 

 

Arconic Corporation stockholders’ equity:

 

 

Common stock

 

1

 

 

1

 

Additional capital

 

3,351

 

 

3,348

 

Accumulated deficit

 

(530

)

 

(155

)

Treasury stock(3)

 

(9

)

 

–

 

Accumulated other comprehensive loss(4)

 

(1,199

)

 

(1,761

)

Total Arconic Corporation stockholders’ equity

 

1,614

 

 

1,433

 

Noncontrolling interest

 

14

 

 

14

 

Total equity

 

1,628

 

 

1,447

 

Total liabilities and equity

$

6,543

 

$

6,314

 

(1)

In March 2021, Arconic issued $300 aggregate principal amount of 6.125% Senior Secured Second-Lien Notes due 2028 at 106.25% of par. In April 2021, the Company used a portion of the net proceeds of this issuance to contribute a total of $250 to its two funded U.S. defined benefit plans (see footnote 2).

 

(2)

The decrease of $606 in Accrued pension benefits was mostly due to cash contributions and the purchase of a group annuity contract associated with the Company’s two funded U.S. defined benefit pension plans. In January 2021, the Company contributed a total of $200 to these two plans, comprised of the estimated minimum required funding for 2021 of $183 and an additional $17. In April 2021, the Company purchased a group annuity contract to transfer the obligation to pay the remaining retirement benefits of approximately 8,400 participants to an insurance company. On a combined basis, this transaction resulted in the settlement of $995 in plan obligations and the transfer of $1,007 in plan assets. In connection with this transaction, the Company contributed a total of $250 to these two plans to maintain the funding level of the remaining plan obligations not transferred. This contribution was funded with the net proceeds from a recent debt offering (see footnote 1). This transaction represents a significant settlement event, and, as a result, the Company was required to complete a remeasurement of these two plans, including an interim actuarial valuation of the plan obligations. Accordingly, the weighted average discount rate used in calculating the plan obligations increased to 3.10% as of April 30, 2021 from 2.54% as of December 31, 2020. This increase drove a decrease in the Company’s liability of $152.

 

(3)

In May 2021, Arconic announced that its Board of Directors approved a share repurchase program authorizing the Company to repurchase shares of its outstanding common stock up to an aggregate transactional value of $300 over a two-year period expiring April 28, 2023. In the quarter ended June 30, 2021, the Company repurchased 246,011 shares of its common stock under this program.

 

(4)

The decrease of $562 in Accumulated other comprehensive loss was mostly due to a reduction in the existing combined net actuarial loss associated with the Company’s two funded U.S. defined benefit pension plans. In the quarter ended June 30, 2021, the Company accelerated the amortization of a portion of this net actuarial loss due to the settlement of a portion of the Company’s pension plan obligations as a result of the purchase of a group annuity contract (see footnote 2) and elections by certain plan participants to receive lump-sum benefit payments. The impact of this activity on Accumulated other comprehensive loss was $437 ($568 before tax impact). The Company recognized the $568 in Restructuring and other charges on its Statement of Consolidated Operations (see footnote 2 to the Statement of Consolidated Operations included in this release). Additionally, as a result of an increase in the discount rate used in calculating the Company’s obligations related to these two plans as of April 30, 2021 (see footnote 2), Accumulated other comprehensive loss was reduced by $117 ($152 before tax impact).

Arconic Corporation and subsidiaries

Statement of Consolidated Cash Flows (unaudited)

(in millions)
 

 

Quarter ended

 

June 30,

 

March 31,

 

June 30,

 

2021

 

2021

 

2020

OPERATING ACTIVITIES

 

 

 

Net (loss) income(1)

$

(427

)

$

52

 

$

(96

)

Adjustments to reconcile net (loss) income to cash (used for) provided from operations:

 

 

 

Depreciation and amortization

 

62

 

 

63

 

 

68

 

Deferred income taxes(1)

 

(117

)

 

4

 

 

28

 

Restructuring and other charges(2)

 

597

 

 

1

 

 

77

 

Net periodic pension benefit cost

 

18

 

 

22

 

 

18

 

Stock-based compensation

 

5

 

 

2

 

 

5

 

Amortization of debt issuance costs

 

1

 

 

2

 

 

21

 

Other

 

1

 

 

12

 

 

2

 

Changes in assets and liabilities, excluding effects of acquisitions, divestitures, and foreign currency translation adjustments:

 

 

 

(Increase) Decrease in receivables

 

(61

)

 

(186

)

 

125

 

(Increase) Decrease in inventories(1)

 

(196

)

 

(161

)

 

171

 

(Increase) Decrease in prepaid expenses and other current assets

 

(13

)

 

3

 

 

(8

)

Increase (Decrease) in accounts payable, trade(3)

 

206

 

 

117

 

 

(295

)

(Decrease) in accrued expenses

 

(1

)

 

(33

)

 

(39

)

Increase (Decrease) in taxes, including income taxes

 

5

 

 

9

 

 

(48

)

Pension contributions(4)

 

(252

)

 

(201

)

 

(12

)

(Increase) Decrease in noncurrent assets

 

(4

)

 

–

 

 

11

 

Increase in noncurrent liabilities

 

9

 

 

–

 

 

10

 

CASH (USED FOR) PROVIDED FROM OPERATIONS

 

(167

)

 

(294

)

 

38

 

 

 

 

 

FINANCING ACTIVITIES

 

 

 

Separation payment to former parent company(5)

 

–

 

 

–

 

 

(728

)

Additions to debt (original maturities greater than three months)(5)

 

–

 

 

319

 

 

1,200

 

Debt issuance costs

 

(1

)

 

(4

)

 

(15

)

Payments on debt (original maturities greater than three months)(5)

 

–

 

 

–

 

 

(1,100

)

Repurchases of common stock(6)

 

(9

)

 

–

 

 

–

 

Other

 

1

 

 

(18

)

 

–

 

CASH (USED FOR) PROVIDED FROM FINANCING ACTIVITIES

 

(9

)

 

297

 

 

(643

)

 

 

 

 

INVESTING ACTIVITIES

 

 

 

Capital expenditures(3)

 

(44

)

 

(28

)

 

(29

)

Proceeds from the sale of assets and businesses

 

(3

)

 

1

 

 

1

 

CASH USED FOR INVESTING ACTIVITIES

 

(47

)

 

(27

)

 

(28

)

 

 

 

 

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS AND RESTRICTED CASH

 

–

 

 

–

 

 

–

 

Net change in cash and cash equivalents and restricted cash

 

(223

)

 

(24

)

 

(633

)

Cash and cash equivalents and restricted cash at beginning of period(7)

 

763

 

 

787

 

 

1,228

 

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD(7)

 

$

 

540

 

$

 

763

 

$

 

595

 

 

 

 

 

 

(1)

Effective July 1, 2020, the Company changed its inventory cost method to average cost for all U.S. inventories previously carried at last-in, first-out (LIFO) cost. Management believes the average cost method more closely reflects the physical flow of inventories, improves comparability of the Company’s operating results with its industry peers, and provides an increased level of consistency in the measurement of inventories in the Company’s consolidated financial results. The effects of the change in accounting principle from LIFO to average cost have been retrospectively applied to the Company’s Statement of Consolidated Cash Flows for the quarter ended June 30, 2020. Accordingly, Net loss increased $4, Deferred income taxes decreased $1, and Decrease in inventories positively changed by $5 from the amounts reported on August 4, 2020. See the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 (filed on February 23, 2021) for additional information.

 

 

(2)

See footnote 2 to the Statement of Consolidated Operations included in this release.

 

 

(3)

In preparing the Statement of Consolidated Cash Flows for the nine months ended September 30, 2020, management identified a misclassification related to the non-cash portion of properties, plants, and equipment additions. This non-cash portion is the result of the timing difference that exists between when the Company records such additions as assets on its Consolidated Balance Sheet and when such additions have been paid in cash. As a result, the amount of (Decrease) in accounts payable, trade reported on August 4, 2020 for the quarter ended June 30, 2020 was overstated by $8 and the amount of Capital expenditures reported on August 4, 2020 for the quarter ended June 30, 2020 was understated by $8. Accordingly, for the quarter ended June 30, 2020, management has corrected both (Decrease) in accounts payable, trade and Capital expenditures from the amounts reported on August 4, 2020 to remove the respective effect of this $8.

 

 

(4)

In January 2021, the Company contributed a total of $200 to its two funded U.S. defined benefit pension plans, comprised of the estimated minimum required funding for 2021 of $183 and an additional $17. In April 2021, the Company contributed a total of $250 to its two funded U.S. defined benefit pension plans to maintain the funding level of the remaining plan obligations not transferred under a group annuity contract (see footnote 2 to the Consolidated Balance Sheet included in this release).

 

 

(5)

In March 2021, Arconic issued $300 aggregate principal amount of 6.125% Senior Secured Second-Lien Notes due 2028 at 106.25% of par. In April 2021, the Company used a portion of the net proceeds of this issuance to contribute a total of $250 to its two funded U.S. defined benefit plans (see footnote 4).

 

 

 

On April 1, 2020, Arconic Inc. separated into two standalone, publicly-traded companies, Arconic Corporation and Howmet Aerospace Inc. (the “Separation”). In connection with the capital structure to be established at the time of the Separation, Arconic secured $1,200 in third-party indebtedness in the quarter ended March 31, 2020. The net proceeds from a portion of this indebtedness was held in escrow until the satisfaction of the escrow release conditions, which included the substantially concurrent completion of the Separation. Accordingly, the escrowed cash was included in Restricted cash as of March 31, 2020 (see footnote 7). The Company used a portion of the net proceeds from the aggregate indebtedness to make a $728 payment to its former parent company on April 1, 2020 to fund the transfer of certain net assets from the former parent company to Arconic in connection with the completion of the Separation.

 

 

 

On April 2, 2020, Arconic incurred an additional $500 of indebtedness as a proactive measure taken by the Company to bolster its liquidity and preserve financial flexibility in light of uncertainties resulting from the COVID-19 pandemic. On May 13, 2020, in order to provide improved financial flexibility, Arconic executed a refinancing of a portion of its outstanding indebtedness by securing $700 in new third-party indebtedness. The Company used the net proceeds from the new indebtedness, together with cash on hand, to repay $1,100 of outstanding indebtedness.

 

 

(6)

In May 2021, Arconic announced that its Board of Directors approved a share repurchase program authorizing the Company to repurchase shares of its outstanding common stock up to an aggregate transactional value of $300 over a two-year period expiring April 28, 2023. In the quarter ended June 30, 2021, the Company repurchased 246,011 shares of its common stock under this program.

 

 

(7)

Cash and cash equivalents and restricted cash at beginning of period for the quarters ended June 30, 2021 and March 31, 2021 and Cash and cash equivalents and restricted cash at end of period for all periods presented includes Restricted cash of less than $0.03. For the quarter ended June 30, 2020, Cash and cash equivalents and restricted cash at beginning of period includes Restricted cash of $593 (see footnote 5).

Arconic Corporation and subsidiaries

Segment Adjusted EBITDA Reconciliation (unaudited)

(in millions)
 

 

Quarter ended

 

June 30,

 

March 31,

 

June 30,

 

2021

 

2021

 

2020

Total Segment Adjusted EBITDA(1),(2)

$

200

 

$

189

 

$

108

 

Unallocated amounts:

 

 

 

Corporate expenses(3)

 

(10

)

 

(9

)

 

(7

)

Stock-based compensation expense

 

(5

)

 

(2

)

 

(5

)

Metal price lag(4)

 

(11

)

 

5

 

 

(10

)

Provision for depreciation and amortization

 

(62

)

 

(63

)

 

(68

)

Restructuring and other charges(5)

 

(597

)

 

(1

)

 

(77

)

Other(6)

 

(10

)

 

(6

)

 

(13

)

Operating (loss) income(2)

 

(495

)

 

113

 

 

(72

)

Interest expense

 

(25

)

 

(23

)

 

(40

)

Other expenses, net

 

(15

)

 

(22

)

 

(16

)

Benefit (Provision) for income taxes(2)

 

108

 

 

(16

)

 

32

 

Net income attributable to noncontrolling interest

 

–

 

 

–

 

 

–

 

Consolidated net (loss) income attributable to Arconic Corporation(2)

 

$

 

(427

 

)

 

$

 

52

 

 

 

$

 

(96

 

)

 

 

 

 

(1)

Arconic’s profit or loss measure for its reportable segments is Segment Adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization). Effective in the third quarter of 2020, management refined the Company’s Segment Adjusted EBITDA measure to remove the impact of metal price lag (see footnote 4). This change was made to further enhance the transparency and visibility of the underlying operating performance of each segment by removing the volatility associated with metal prices. The Company calculates Segment Adjusted EBITDA as Total sales (third-party and intersegment) minus each of (i) Cost of goods sold, (ii) Selling, general administrative, and other expenses, and (iii) Research and development expenses, plus Stock-based compensation expense and Metal price lag. Arconic’s Segment Adjusted EBITDA may not be comparable to similarly titled measures of other companies’ reportable segments.

 

Also, effective July 1, 2020, the Company changed its inventory cost method to average cost for all U.S. inventories previously carried at last-in, first-out (LIFO) cost. The effects of the change in accounting principle have been retrospectively applied to the Company’s Statement of Consolidated Operations for the quarter ended June 30, 2020. See footnote 2 for additional information.

 

Segment Adjusted EBITDA for the quarter ended June 30, 2020 was recast to reflect the updated measure of segment profit or loss and the change in inventory cost method.

 

Total Segment Adjusted EBITDA is the sum of the respective Segment Adjusted EBITDA for each of the Company’s three reportable segments: Rolled Products, Building and Construction Systems, and Extrusions. This amount is being presented for the sole purpose of reconciling Segment Adjusted EBITDA to the Company’s Consolidated net (loss) income.

 

(2)

Effective July 1, 2020, the Company changed its inventory cost method to average cost for all U.S. inventories previously carried at LIFO cost. Management believes the average cost method more closely reflects the physical flow of inventories, improves comparability of the Company’s operating results with its industry peers, and provides an increased level of consistency in the measurement of inventories in the Company’s consolidated financial statements. The effects of the change in accounting principle from LIFO to average cost have been retrospectively applied to the Company’s Statement of Consolidated Operations for the quarter ended June 30, 2020. Accordingly, Net loss attributable to Arconic Corporation increased $4 (comprised of a $5 increase to Cost of goods sold and a $1 increase to Benefit for income taxes) from the amount previously reported in the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2020 (filed on August 4, 2020). See the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 (filed on February 23, 2021) for additional information.

 

(3)

Corporate expenses are composed of general administrative and other expenses of operating the corporate headquarters and other global administrative facilities.

 

(4)

Metal price lag represents the financial impact of the timing difference between when aluminum prices included in Sales are recognized and when aluminum purchase prices included in Cost of goods sold are realized. This adjustment aims to remove the effect of the volatility in metal prices and the calculation of this impact considers applicable metal hedging transactions.

 

(5)

See footnote 2 to the Statement of Consolidated Operations included in this release.

 

(6)

Other includes certain items that impact Cost of goods sold and Selling, general administrative, and other expenses on the Company’s Statement of Consolidated Operations that are not included in Segment Adjusted EBITDA, including those described as “Other special items” (see footnote 4 to the reconciliation of Adjusted EBITDA within Calculation of Non-GAAP Financial Measures included in this release).

Arconic Corporation and subsidiaries

Calculation of Non-GAAP Financial Measures (unaudited)

(in millions)
 

Adjusted EBITDA

Quarter ended

June 30,

 

March 31,

 

June 30,

 

2021

 

2021

 

2020

Net (loss) income attributable to Arconic Corporation(1)

$

(427

)

$

52

 

$

(96

)

 

 

 

 

Add:

 

 

 

Net income attributable to noncontrolling interest

 

–

 

 

–

 

 

–

 

(Benefit) Provision for income taxes(1)

 

(108

)

 

16

 

 

(32

)

Other expenses, net

 

15

 

 

22

 

 

16

 

Interest expense

 

25

 

 

23

 

 

40

 

Restructuring and other charges(2)

 

597

 

 

1

 

 

77

 

Provision for depreciation and amortization

 

62

 

 

63

 

 

68

 

Stock-based compensation

 

5

 

 

2

 

 

5

 

Metal price lag(3)

 

11

 

 

(5

)

 

10

 

Other special items(4)

 

7

 

 

5

 

 

11

 

 

 

 

 

Adjusted EBITDA(1)

$

187

 

$

179

 

$

99

 

 

 

 

 

Sales

$

1,801

 

$

1,675

 

$

1,187

 

 

 

 

 

Adjusted EBITDA Margin

 

10.4

%

 

10.7

%

 

8.3

%

Arconic’s definition of Adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization) is net margin plus an add-back for the following items: Provision for depreciation and amortization; Stock-based compensation; Metal price lag (see below); and Other special items. Net margin is equivalent to Sales minus the following items: Cost of goods sold; Selling, general administrative, and other expenses; Research and development expenses; and Provision for depreciation and amortization. Special items are composed of restructuring and other charges, discrete income tax items, and other items as deemed appropriate by management. There can be no assurances that additional special items will not occur in future periods. Adjusted EBITDA is a non-GAAP financial measure. Management believes that this measure is meaningful to investors because Adjusted EBITDA provides additional information with respect to Arconic’s operating performance and the Company’s ability to meet its financial obligations. The Adjusted EBITDA presented may not be comparable to similarly titled measures of other companies.

 

Effective in the third quarter of 2020, management refined the Company’s Adjusted EBITDA measure to remove the impact of metal price lag (see footnote 3). This change was made to further enhance the transparency and visibility of the underlying operating performance of the Company by removing the volatility associated with metal prices. Also, effective July 1, 2020, the Company changed its inventory cost method to average cost for all U.S. inventories previously carried at last-in, first-out (LIFO) cost. The effects of the change in accounting principle have been retrospectively applied to the Company’s Statement of Consolidated Operations for the quarter ended June 30, 2020. See footnote 1 for additional information. Adjusted EBITDA for the quarter ended June 30, 2020 was recast to reflect both these changes.

(1)

Effective July 1, 2020, the Company changed its inventory cost method to average cost for all U.S. inventories previously carried at LIFO cost. Management believes the average cost method more closely reflects the physical flow of inventories, improves comparability of the Company’s operating results with its industry peers, and provides an increased level of consistency in the measurement of inventories in the Company’s consolidated financial statements. The effects of the change in accounting principle from LIFO to average cost have been retrospectively applied to the Company’s Statement of Consolidated Operations for the quarter ended June 30, 2020. Accordingly, Net loss attributable to Arconic Corporation increased $4 (comprised of a $5 increase to Cost of goods sold and a $1 increase to Benefit for income taxes) from the amount previously reported in the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2020 (filed on August 4, 2020). See the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 (filed on February 23, 2021) for additional information.

 

(2)

See footnote 2 to the Statement of Consolidated Operations included in this release.

 

(3)

Metal price lag represents the financial impact of the timing difference between when aluminum prices included in Sales are recognized and when aluminum purchase prices included in Cost of goods sold are realized. This adjustment aims to remove the effect of the volatility in metal prices and the calculation of this impact considers applicable metal hedging transactions.

 

(4)

Other special items include the following:

  • for the quarter ended June 30, 2021, a write-down of inventory related to the idling of both the remaining operations at the Chandler (Arizona) extrusions facility and the casthouse operations at the Lafayette (Indiana) extrusions facility ($4) and costs related to several legal matters ($3);

  • for the quarter ended March 31, 2021, costs related to several legal matters, including Grenfell Tower ($4) and other ($1); and

  • for the quarter ended June 30, 2020, costs related to several legal matters, including a customer settlement ($5), Grenfell Tower ($3), and other ($3).

Net Debt

June 30,

 

2021

 

 

Long-term debt

$

1,593

Short-term borrowings

 

1

Total debt

$

1,594

 

 

Less: Cash and cash equivalents

 

540

 

 

Net debt

$

1,054

Net debt is a non-GAAP financial measure. Management believes that this measure is meaningful to investors because management assesses Arconic’s leverage position after considering available cash that could be used to repay outstanding debt. Long-term debt equals $1,600 principal of outstanding indebtedness plus $18 of unamortized debt premium less $25 of unamortized debt issuance costs.

Adjusted EBITDA to

Free Cash Flow Bridge

  

Quarter ended
 

June 30,

2021

 

March 31,

2021

 

December 31,

2020

 

September 30,

2020

 

June 30,

2020

Adjusted EBITDA(1)

  

$187

 

 

$179

 

 

$151

 

 

$165

 

 

$99

 

Change in working capital(2),(4)

  

(51

)

 

(230

)

 

130

 

 

185

 

 

1

 

Cash payments for:

         

Environmental remediation

 

(4

)

 

(17

)

 

(28

)

 

(33

)

 

(4

)

Pension contributions(3)

  

(252

)

 

(201

)

 

(227

)

 

–

 

 

(12

)

Other postretirement benefits

 

(10

)

 

(10

)

 

(14

)

 

(14

)

 

(13

)

Restructuring actions

 

(4

)

 

(5

)

 

(9

)

 

(5

)

 

(9

)

Interest

 

(22

)

 

(18

)

 

(21

)

 

(19

)

 

(5

)

Income taxes

 

(6

)

 

(6

)

 

(11

)

 

(3

)

 

(7

)

Capital expenditures(4)

  

(44

)

 

(28

)

 

(37

)

 

(39

)

 

(29

)

Other

 

(5

)

 

14

 

 

17

 

 

(36

)

 

(12

)

Free Cash Flow(5)

  

$(211

)

 

$(322

)

 

$(49

)

 

$201

 

 

$9

 

           

Add-back cash payments for:

         

Environmental remediation

 

4

 

 

17

 

 

28

 

 

33

 

 

4

 

Pension benefits(6)

  

254

 

 

203

 

 

229

 

 

2

 

 

14

 

Other postretirement benefits

 

10

 

 

10

 

 

14

 

 

14

 

 

13

 

Adjusted Free Cash Flow(7)

  

$57

 

 

$(92

)

 

$222

 

 

$250

 

 

$40

 

(1)

Adjusted EBITDA is a non-GAAP financial measure. See the reconciliation of Adjusted EBITDA included in this release for (i) Arconic’s definition of Adjusted EBITDA, (ii) management’s rationale for the presentation of this non-GAAP measure, and (iii) a reconciliation of this non-GAAP measure to the most directly comparable GAAP measure.

 

(2)

Arconic’s definition of working capital is Receivables plus Inventories less Accounts payable, trade.

 

(3)

In January 2021, the Company contributed a total of $200 to its two funded U.S. defined benefit pension plans, comprised of the estimated minimum required funding for 2021 of $183 and an additional $17. In April 2021, the Company contributed a total of $250 to its two funded U.S. defined benefit pension plans to maintain the funding level of the remaining plan obligations not transferred under a group annuity contract.

 

(4)

In preparing the Statement of Consolidated Cash Flows for the nine months ended September 30, 2020, management identified a misclassification related to the non-cash portion of properties, plants, and equipment additions. This non-cash portion is the result of the timing difference that exists between when the Company records such additions as assets on its Consolidated Balance Sheet and when such additions have been paid in cash. As a result, the amount of (Decrease) in accounts payable, trade (included in Change in working capital) reported on August 4, 2020 for the quarter ended June 30, 2020 was overstated by $8 and the amount of Capital expenditures reported on August 4, 2020 for the quarter ended June 30, 2020 was understated by $8. Accordingly, for the quarter ended June 30, 2020, management has corrected both (Decrease) in accounts payable, trade and Capital expenditures from the amounts reported on August 4, 2020 to remove the respective effect of this $8.

 

(5)

Arconic’s definition of Free Cash Flow is Cash from operations less capital expenditures. Free Cash Flow is a non-GAAP financial measure. Management believes that this measure is meaningful to investors because management reviews cash flows generated from operations after taking into consideration capital expenditures, which are both necessary to maintain and expand the Company’s asset base and expected to generate future cash flows from operations. It is important to note that Free Cash Flow does not represent the residual cash flow available for discretionary expenditures since other non-discretionary expenditures, such as mandatory debt service requirements, are not deducted from the measure.

2Q 2021: Cash used for operations of $(167) less capital expenditures of $44 = free cash flow of $(211)

1Q 2021: Cash used for operations of $(294) less capital expenditures of $28 = free cash flow of $(322)

4Q 2020: Cash used for operations of $(12) less capital expenditures of $37 = free cash flow of $(49)

3Q 2020: Cash provided from operations of $240 less capital expenditures of $39 = free cash flow of $201

2Q 2020: Cash provided from operations of $38 less capital expenditures of $29 = free cash flow of $9

 

(6)

Pension benefits are comprised of contributions to funded defined benefit plans and benefit payments to participants in unfunded defined benefit plans.

 

(7)

Adjusted Free Cash Flow is a non-GAAP financial measure. Management believes that this measure is meaningful to investors because Adjusted Free Cash Flow provides an incremental view of the Company’s cash performance by excluding payments related to legacy liabilities.

 

Investor Contact

Shane Rourke

(412) 315-2984

[email protected]

Media Contact

Tracie Gliozzi

(412) 992-2525

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TopBuild Reports Second Quarter 2021 Results

  • 29.1% increase in net sales
  • 150 bps gross margin expansion, 140 bps on an adjusted basis
  • 15.4% operating margin, 15.6% on an adjusted basis, up 270 bps
  • $2.72 net income per diluted share, $2.76 on an adjusted basis
  • 18.0% adjusted EBITDA margin, 18.4% on a same branch basis

Announces New $200 Million Share Repurchase Program

DAYTONA BEACH, Fla., Aug. 03, 2021 (GLOBE NEWSWIRE) — TopBuild Corp.(NYSE:BLD), a leading installer and distributor of insulation and building material products today reported results for the second quarter ended June 30, 2021.

Robert Buck, President and Chief Executive Officer, stated, “We are very pleased with our second quarter results. Top line growth was strong and operating margins expanded at both business segments. Our solid performance demonstrates our team’s ability to successfully manage pricing in conjunction with multiple material cost increases as well as productivity in a labor and material constrained market.

“Looking ahead, we expect the residential housing market to remain solid and the commercial market to continue to strengthen. Our focus will remain on driving profitable growth and creating
long-term value for our stakeholders.”

Second Quarter Financial Highlights
(unless otherwise indicated, comparisons are to the quarter ended June 30, 2020)

  • Net sales increased 29.1% to $834.3. million, 18.3% on a same branch basis, primarily driven by increases in both price and volume as well as M&A.
  • Gross margin increased 150 basis points to 29.1%. On an adjusted basis, gross margin increased 140 basis points to 29.2%.
  • Operating profit was $128.3 million, compared to operating profit of $80.5 million, a 59.5% improvement. On an adjusted basis, operating profit was $129.9 million, compared to $83.5 million, a 55.5% improvement.
  • Operating margin was 15.4%, up 290 basis points. Adjusted operating margin improved 270 basis points to 15.6%.
  • Net income was $90.4 million, or $2.72 per diluted share, compared to $55.5 million, or $1.67 per diluted share. Adjusted income was $91.6 million, or $2.76 per diluted share, compared to $55.7 million, or $1.68 per diluted share.
  • Adjusted EBITDA was $149.8 million, compared to $107.8 million, a 39.1% increase, and adjusted EBITDA margin improved 130 basis points to 18.0%.
  • At June 30, 2021, the Company had cash and cash equivalents of $261.7 million and availability under its revolving credit facility of $378.8 million for total liquidity of $640.5 million.

Six Month Financial Highlights
(unless otherwise indicated, comparisons are to six months ended June 30, 2020)

  • Net sales increased 21.4% to $1,577.1 million. On a same branch basis, revenue increased 13.9% to $1,479.4 million.
  • Gross margin expanded 110 basis points to 28.0%. On an adjusted basis, gross margin expanded 90 basis points to 28.0%.
  • Operating profit was $224.2 million, compared to operating profit of $150.4 million, a 49.0% improvement. On an adjusted basis, operating profit was $227.1 million, compared to $153.8 million, a 47.7% improvement.
  • Operating margin was 14.2%, and 14.4% on an adjusted basis, a 260-basis point improvement.
  • Net income was $150.2 million, or $4.53 per diluted share, compared to $106.3 million, or $3.18 per diluted share. Adjusted income was $158.7 million, or $4.78 per diluted share, compared to $101.6 million, or $3.04 per diluted share.
  • Adjusted EBITDA was $265.7 million, compared to $196.1 million, a 35.5% increase. Adjusted EBITDA margin was 16.8%, a 170-basis point improvement.

Operating Segment Highlights
($ in 000s)

(comparisons are to the period ended June 30, 2020)

TruTeam 3 Months Ended
6/30/21 		6 Months Ended
6/30/21 		  Service Partners 3 Months Ended
6/30/21 		6 Months Ended
6/30/21
Sales $605,625 $1,138,378   Sales $273,364 $524,965
Change       Change    
Volume 10.4% 7.7%   Volume 14.3% 14.0%
Price 5.0% 3.0%   Price 10.3% 7.0%
M&A 14.4% 10.1%   M&A 1.8% 0.9%
Total Change 29.8% 20.8%   Total Change 26.4% 21.9%
Operating Margin 16.4% 15.2%   Operating Margin 15.7% 14.9%
Change 150 bps 140 bps   Change 450 bps 360 bps
Adj. Operating Margin 16.6% 15.3%   Adj. Operating Margin 15.7% 14.9%
Change 140 bps 130 bps   Change 410 bps 330 bps

Capital Allocation

Acquisitions
Three companies were acquired in the second quarter, American Building Systems, Creative Conservation and RJ Insulation. Combined, they are expected to generate approximately $155 million of revenue on a pro forma full year basis. Year-to-date, the Company has acquired five companies which are expected to generate approximately $221 million of revenue on a pro forma, full year basis.

“M&A remains our number one capital allocation priority. Our prospects center around our core of insulation and related adjacent products that will further strengthen our industry leadership position. Our pipeline is robust, and we expect to stay very busy on this front through the remainder of the year,” added Buck.

“Our strong balance sheet and cash flows also provide us with the flexibility to continue our history of share repurchases, and we are pleased to announce another $200 million share repurchase program.”

Share Repurchase Program

In the second quarter, the Company repurchased 73,747 shares at an average price of $192.30 per share. Year-to-date, the Company has repurchased 123,031 shares at an average price of $195.38 per share.

The Company also announced that its Board of Directors has approved an additional share repurchase program whereby the Company may purchase up to $200 million of its common stock. Repurchases will be made from cash on hand as well as from a portion of the free cash flow expected to be generated from the business. The program may be suspended or discontinued at any time.

2021 Outlook

Sales and Adjusted EBITDA Guidance

(1)

($ in millions)    
2021 Low High
Sales $ 3,290 $ 3,370
Adjusted EBITDA* $ 565 $ 590

*See table for adjusted EBITDA reconciliation.

Assumptions

(1)

($ in millions)    
2021 Low High
Housing Starts   1,475   1,525
Estimated net income $ 339.5 $ 363.6
Interest Expense and other, net $ 24.7 $ 22.2
Income tax expense $ 119.3 $ 127.8
Depreciation and Amortization $ 70.6 $ 67.5
Share based compensation $ 10.9 $ 8.9


(1)
This guidance and long-term targets reflect management’s current view of present and future market conditions and are based on assumptions such as housing starts, general and administrative expenses, weighted average diluted shares outstanding and interest rates. These targets do not include any effects related to potential acquisitions or divestitures that may occur after the date of this press release. A reconciliation of non-GAAP targets to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty regarding, and the potential variability of, the costs and expenses that may be incurred in the future and therefore, cannot be reasonably predicted. The effect of these excluded items may be significant. Factors that could cause actual long-term results to differ materially from TopBuild’s current expectations are discussed below and are also detailed in the Company’s 2020 Annual Report on Form 10-K and subsequent SEC reports.

Conference Call

A conference call to discuss second quarter 2021 financial results is scheduled for today, Tuesday, August 3, at 9:00 a.m. Eastern time. The call may be accessed by dialing (877) 407-9037. The conference call will be webcast simultaneously on the Company’s website at www.topbuild.com.

About TopBuild

TopBuild Corp., a Fortune 1000 Company headquartered in Daytona Beach, Florida, is a leading installer and distributor of insulation and building material products to the U.S. construction industry. We provide insulation and building material services nationwide through TruTeam®, which has approximately 235 branches, and through Service Partners® which distributes insulation and building material products from approximately 75 branches. We leverage our national footprint to gain economies of scale while capitalizing on our local market presence to forge strong relationships with our customers. To learn more about TopBuild please visit our website at www.topbuild.com.

Use of Non-GAAP Financial Measures

Adjusted EBITDA, incremental EBITDA margin, adjusted EBITDA margin, the “adjusted” financial measures presented above, and figures presented on a “same branch basis” are not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). The Company believes that these non-GAAP financial measures, which are used in managing the business, may provide users of this financial information with additional meaningful comparisons between current results and results in prior periods. We define same branch sales as sales from branches in operation for at least 12 full calendar months. Such non-GAAP financial measures are reconciled to their closest GAAP financial measures in tables contained in this press release. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company’s reported results under GAAP. Additional information may be found in the Company’s filings with the Securities and Exchange Commission which are available on TopBuild’s website at www.topbuild.com.

Safe Harbor Statement

Statements contained herein reflect our views about future periods, including our future plans and performance, constitute “forward-looking statements” under the Private Securities Litigation Reform Act of 1995.  Forward-looking statements can be identified by words such as “will,” “would,” “anticipate,” “expect,” “believe,” “designed,” “plan,” or “intend,” the negative of these terms, and similar references to future periods.  These views involve risks and uncertainties that are difficult to predict and, accordingly, our actual results may differ materially from the results discussed in our forward-looking statements.  We caution you against unduly relying on any of these forward-looking statements.  Our future performance may be affected by the duration and impact of the COVID-19 pandemic on the United States economy, specifically with respect to residential and commercial construction; our ability to continue operations in markets affected by the COVID-19 pandemic and our ability to collect receivables from our customers; our reliance on residential new construction, residential repair/remodel, and commercial construction; our reliance on third-party suppliers and manufacturers; our ability to attract, develop, and retain talented personnel and our sales and labor force; our ability to maintain consistent practices across our locations; and our ability to maintain our competitive position.  We discuss the material risks we face under the caption entitled “Risk Factors” in our Annual Report for the year ended December 31, 2020, as filed with the SEC on February 23, 2021, as well as under the caption entitled “Risk Factors” in subsequent reports that we file with the SEC.  Our forward-looking statements in this filing speak only as of the date of this filing.  Factors or events that could cause our actual results to differ may emerge from time to time and it is not possible for us to predict all of them.  Unless required by law, we undertake no obligation to update publicly any forward-looking statements as a result of new information, future events, or otherwise.  The Company believes that the non-GAAP performance measures and ratios that are contained herein, which management uses to manage our business, provide users of this financial information with additional meaningful comparisons between current results and results in our prior periods.  Non-GAAP performance measures and ratios should be viewed in addition, and not as an alternative, to the Company’s reported results under accounting principles generally accepted in the United States.  Additional information about the Company is contained in the Company’s filings with the SEC and is available on TopBuild’s website at www.topbuild.com.

Investor Relations and Media Contact

Tabitha Zane
[email protected]
386-763-8801

(tables follow)

TopBuild Corp.            
Condensed Consolidated Statements of Operations (Unaudited)        
(in thousands, except share and per common share amounts)
                         
    Three Months Ended June 30,    Six Months Ended June 30, 
    2021   2020   2021   2020
Net sales   $ 834,255     $ 646,099        $ 1,577,053     $ 1,299,327  
Cost of sales     591,075       468,045       1,136,114       949,316  
Gross profit     243,180       178,054       440,939       350,011  
                         
Selling, general, and administrative expense     114,894       97,600       216,767       199,568  
Operating profit     128,286       80,454       224,172       150,443  
                         
Other income (expense), net:                        
Interest expense     (6,105 )     (8,277 )     (12,707 )     (17,018 )
Loss on extinguishment of debt     —       —       (13,862 )     (233 )
Other, net     66       89       144       561  
Other expense, net     (6,039 )     (8,188 )     (26,425 )     (16,690 )
Income before income taxes     122,247       72,266       197,747       133,753  
                         
Income tax expense     (31,867 )     (16,770 )     (47,525 )     (27,485 )
Net income   $ 90,380     $ 55,496     $ 150,222     $ 106,268  
                         
Net income per common share:                        
Basic   $ 2.75     $ 1.69     $ 4.57     $ 3.22  
Diluted   $ 2.72     $ 1.67     $ 4.53     $ 3.18  
                         
Weighted average shares outstanding:                        
Basic     32,865,303       32,867,842       32,846,016       33,018,148  
Diluted     33,177,435       33,202,423       33,190,107       33,401,135  

TopBuild Corp.                
Condensed Consolidated Balance Sheets and Other Financial Data (Unaudited)                
(dollars in thousands)                
    As of
    June 30,   December 31,
ASSETS   2021   2020
Current assets:                
Cash and cash equivalents   $ 261,739     $ 330,007  
Receivables, net of an allowance for credit losses of $8,337 at June 30, 2021, and $6,926 at December 31, 2020     491,625       427,340  
Inventories, net     178,576       161,369  
Prepaid expenses and other current assets     20,523       17,689  
Total current assets     952,463       936,405  
                 
Right of use assets     100,558       83,490  
Property and equipment, net     199,982       180,053  
Goodwill     1,494,200       1,410,685  
Other intangible assets, net     237,573       190,605  
Deferred tax assets, net     2,729       2,728  
Other assets     11,213       11,317  
Total assets   $ 2,998,718     $ 2,815,283  
                 
LIABILITIES                
Current liabilities:                
Accounts payable   $ 356,570     $ 331,710  
Current portion of long-term debt     23,476       23,326  
Accrued liabilities     126,517       107,949  
Short-term lease liabilities     36,673       33,492  
Total current liabilities     543,236       496,477  
                 
Long-term debt     680,999       683,396  
Deferred tax liabilities, net     168,091       168,568  
Long-term portion of insurance reserves     49,456       50,657  
Long-term lease liabilities     68,457       53,749  
Other liabilities     13,663       13,642  
Total liabilities     1,523,902       1,466,489  
                 
EQUITY     1,474,816       1,348,794  
Total liabilities and equity   $ 2,998,718     $ 2,815,283  
                 
                 
    As of June 30, 
       2021   2020
Other Financial Data                
Receivable days     45       49  
Inventory days     30       28  
Accounts payable days     74       83  
Receivables, net plus inventories, net less accounts payable   $ 313,631     $ 277,080  
Receivables, net plus inventories, net less accounts payable as a percent of sales (TTM) † 9.9 %     10.5 %
                 
† Trailing 12 months sales have been adjusted for the pro forma effect of acquired branches            

TopBuild Corp.      
Condensed Consolidated Statement of Cash Flows (Unaudited)      
(in thousands)            
             
    Six Months Ended June 30, 
    2021   2020
Cash Flows Provided by (Used in) Operating Activities:                   
Net income   $ 150,222     $ 106,268  
Adjustments to reconcile net income to net cash provided by operating activities:            
Depreciation and amortization     33,221       33,311  
Share-based compensation     5,377       9,038  
Loss on extinguishment of debt     13,862       233  
Loss on sale or abandonment of property and equipment     833       320  
Amortization of debt issuance costs     858       716  
Provision for bad debt expense     4,037       3,756  
Loss from inventory obsolescence     1,129       1,313  
Deferred income taxes, net     (206 )     (38 )
Change in certain assets and liabilities            
Receivables, net     (36,277 )     1,894  
Inventories, net     (8,055 )     538  
Prepaid expenses and other current assets     (2,273 )     9,151  
Accounts payable     21,782       (16,390 )
Accrued liabilities     17,693       28,188  
Payment of contingent consideration     —       (413 )
Other, net     —       277  
Net cash provided by operating activities     202,203       178,162  
             
Cash Flows Provided by (Used in) Investing Activities:            
Purchases of property and equipment     (28,560 )     (20,937 )
Acquisition of businesses     (195,411 )     (20,526 )
Proceeds from sale of property and equipment     193       763  
Net cash used in investing activities     (223,778 )     (40,700 )
             
Cash Flows Provided by (Used in) Financing Activities:            
Proceeds from issuance of long-term debt     411,250       300,000  
Repayment of long-term debt     (421,716 )     (313,407 )
Payment of debt issuance costs     (6,500 )     (2,280 )
Taxes withheld and paid on employees’ equity awards     (11,491 )     (13,165 )
Exercise of stock options     5,952       —  
Repurchase of shares of common stock     (24,038 )     (34,152 )
Payment of contingent consideration     (150 )     (428 )
Net cash used in financing activities     (46,693 )     (63,432 )
             
Cash and Cash Equivalents            
(Decrease) increase for the period     (68,268 )     74,030  
Beginning of period     330,007       184,807  
End of period   $ 261,739     $ 258,837  
             
Supplemental disclosure of noncash activities:            
Leased assets obtained in exchange for new operating lease liabilities   $ 39,135     $ 19,257  
Accruals for property and equipment     460       323  

TopBuild Corp.                      
Segment Data (Unaudited)                    
(dollars in thousands)                                        
                                         
    Three Months Ended June 30,              Six Months Ended June 30,       
    2021   2020   Change   2021   2020   Change
TruTeam                                        
Sales   $ 605,625     $ 466,569       29.8 %   $ 1,138,378     $ 942,442     20.8 %
                                         
Operating profit, as reported   $ 99,066     $ 69,643                 172,702       129,994        
Operating margin, as reported     16.4  %   14.9  %             15.2  %   13.8  %      
                                         
Rationalization charges     —       857                 —       857        
Acquisition related costs     1,112       —                 1,112       4        
COVID-19 pay     116       638                 605       638        
Operating profit, as adjusted   $ 100,294     $ 71,138               $ 174,419     $ 131,493        
Operating margin, as adjusted     16.6  %   15.2  %             15.3  %   14.0  %      
                                         
Service Partners                                        
Sales   $ 273,364     $ 216,336       26.4 %   $ 524,965     $ 430,558     21.9 %
                                         
Operating profit, as reported   $ 42,856     $ 24,155                 78,241       48,825        
Operating margin, as reported     15.7  %   11.2  %             14.9  %   11.3  %      
                                         
Rationalization charges     —       944                 —       944        
COVID-19 pay     20       54                 54       54        
Operating profit, as adjusted   $ 42,876     $ 25,153               $ 78,295     $ 49,823        
Operating margin, as adjusted     15.7  %   11.6  %             14.9  %   11.6  %      
                                         
Total                                        
Sales before eliminations   $ 878,989     $ 682,905               $ 1,663,343     $ 1,373,000        
Intercompany eliminations     (44,734 )     (36,806 )               (86,290 )     (73,673 )      
Net sales after eliminations   $ 834,255     $ 646,099       29.1 %   $ 1,577,053     $ 1,299,327     21.4 %
                                         
Operating profit, as reported – segments   $ 141,922     $ 93,798               $ 250,943     $ 178,819        
General corporate expense, net     (6,704 )     (7,383 )               (13,311 )     (16,581 )      
Intercompany eliminations     (6,932 )     (5,961 )               (13,460 )     (11,795 )      
Operating profit, as reported   $ 128,286     $ 80,454               $ 224,172     $ 150,443        
Operating margin, as reported     15.4  %   12.5  %             14.2  %   11.6  %      
                                         
Rationalization charges     —       2,376                 16       2,376        
Acquisition related costs †     1,457       (40 )               2,210       196        
Refinancing costs     —       20                 —       57        
COVID-19 pay     136       692                 659       692        
Operating profit, as adjusted   $ 129,879     $ 83,502               $ 227,057     $ 153,764        
Operating margin, as adjusted     15.6  %   12.9  %             14.4  %   11.8  %      
                                         
Share-based compensation     2,266       5,130                 5,377       9,038        
Depreciation and amortization     17,703       19,121                 33,221       33,311        
EBITDA, as adjusted   $ 149,848     $ 107,753               $ 265,655     $ 196,113        
EBITDA margin, as adjusted     18.0  %   16.7  %             16.8  %   15.1  %      
                                         
Sales change period over period     188,156                       277,726              
EBITDA, as adjusted, change period over period     42,095                       69,542              
Incremental EBITDA, as adjusted, as a percentage of change in sales     22.4  %                   25.0  %          
                                         
† Acquisition related costs include corporate level adjustments as well as segment operating adjustments.              

TopBuild Corp.              
Non-GAAP Reconciliations (Unaudited)
(in thousands, except share and per common share amounts)
                         
    Three Months Ended June 30,    Six Months Ended June 30, 
    2021   2020   2021   2020

Gross Profit and Operating Profit Reconciliations
 		                       
                         
Net sales   $ 834,255     $ 646,099     $ 1,577,053     $ 1,299,327  
                         
Gross profit, as reported   $ 243,180     $ 178,054     $ 440,939     $ 350,011  
                         
Rationalization charges     —       1,079       —       1,079  
COVID-19 pay     122       482       592       482  
Gross profit, as adjusted   $ 243,302     $ 179,615     $ 441,531     $ 351,572  
                         
Gross margin, as reported     29.1 %   27.6 %   28.0 %   26.9 %
Gross margin, as adjusted     29.2 %   27.8 %   28.0 %   27.1 %
                         
Operating profit, as reported   $ 128,286     $ 80,454     $ 224,172     $ 150,443  
                         
Rationalization charges     —       2,376       16       2,376  
Acquisition related costs     1,457       (40 )     2,210       196  
Refinancing costs     —       20       —       57  
COVID-19 pay     136       692       659       692  
Operating profit, as adjusted   $ 129,879     $ 83,502     $ 227,057     $ 153,764  
                         
Operating margin, as reported     15.4 %   12.5 %   14.2 %   11.6 %
Operating margin, as adjusted     15.6 %   12.9 %   14.4 %   11.8 %
                         

Income Per Common Share Reconciliation
 		                       
                         
Income before income taxes, as reported   $ 122,247     $ 72,266     $ 197,747     $ 133,753  
                         
Rationalization charges     —       2,376       16       2,376  
Acquisition related costs     1,457       (40 )     2,210       196  
Refinancing costs and loss on extinguishment of debt     —       20       13,862       290  
COVID-19 pay     136       692       659       692  
Income before income taxes, as adjusted     123,840       75,314       214,494       137,307  
                         
Tax rate at 26.0%     (32,198 )     (19,582 )     (55,769 )     (35,700 )
Income, as adjusted   $ 91,642     $ 55,732     $ 158,725     $ 101,607  
                         
Income per common share, as adjusted   $ 2.76     $ 1.68     $ 4.78     $ 3.04  
                         
Weighted average diluted common shares outstanding     33,177,435       33,202,423       33,190,107       33,401,135  

TopBuild Corp.
Same Branch and Acquisition Net Sales and Adjusted EBITDA (Unaudited)
(dollars in thousands)                        
                         
    Three Months Ended June 30,    Six Months Ended June 30, 
    2021   2020   2021   2020
Net sales                        
Same branch:                        
TruTeam   $ 538,360     $ 466,569     $ 1,043,657     $ 942,442  
Service Partners     269,473       216,336       521,074       430,558  
Eliminations     (43,750 )     (36,806 )     (85,305 )     (73,673 )
Total same branch     764,083       646,099       1,479,426       1,299,327  
                         
Acquisitions (a):                        
TruTeam   $ 67,265     $ —     $ 94,721     $ —  
Service Partners     3,891       —       3,891       —  
Eliminations     (984 )     —       (985 )     —  
Total acquisitions     70,172       —       97,627       —  
Total   $ 834,255     $ 646,099     $ 1,577,053     $ 1,299,327  
                         
EBITDA, as adjusted                        
Same branch   $ 140,425     $ 107,753     $ 253,554     $ 196,113  
Acquisitions (a)     9,423       —       12,101       —  
Total   $ 149,848     $ 107,753     $ 265,655     $ 196,113  
                         
EBITDA, as adjusted, as a percentage of sales                        
Same branch (b)     18.4 %           17.1 %      
Acquisitions (c)     13.4 %           12.4 %      
Total (d)     18.0 %     16.7 %     16.8 %     15.1 %
                         
As Adjusted Incremental EBITDA, as a percentage of change in sales                        
Same branch (e)     27.7 %           31.9 %      
Acquisitions (c)     13.4 %           12.4 %      
Total (f)     22.4 %           25.0 %      
                         
(a) Represents current year impact of acquisitions in their first twelve months
(b) Same branch EBITDA, as adjusted, as a percentage of same branch sales
(c) Acquired EBITDA, as adjusted, as a percentage of acquired sales
(d) Total EBITDA, as adjusted, as a percentage of total sales
(e) Change in same branch EBITDA, as adjusted, as a percentage of change in same branch sales
(f) Change in total EBITDA, as adjusted, as a percentage of change in total sales

TopBuild Corp.
Same Branch and Acquisition Net Sales by Market (Unaudited)
(in thousands)
                       
  Three Months Ended June 30,    Six Months Ended June 30, 
  2021   2020   2021   2020
Same branch:                      
Residential $ 594,259   $ 505,534   $ 1,151,253   $ 1,012,266
Commercial   169,824     140,565     328,173     287,061
Same branch net sales   764,083     646,099     1,479,426     1,299,327
                       
Acquisitions (a):                      
Residential $ 58,351   $ —   $ 78,141   $ —
Commercial   11,821     —     19,486     —
Acquisitions net sales   70,172     —     97,627     —
Total net sales $ 834,255   $ 646,099   $ 1,577,083   $ 1,299,327
                       
(a) Represents current year impact of acquisitions in their first twelve months

TopBuild Corp.
Reconciliation of Adjusted EBITDA to Net Income (Unaudited)
(in thousands)
                         
    Three Months Ended June 30,    Six Months Ended June 30, 
    2021   2020   2021   2020
Net income, as reported   $ 90,380   $ 55,496     $ 150,222   $ 106,268
Adjustments to arrive at EBITDA, as adjusted:                        
Interest expense and other, net     6,039     8,188       12,563     16,457
Income tax expense     31,867     16,770       47,525     27,485
Depreciation and amortization     17,703     19,121       33,221     33,311
Share-based compensation     2,266     5,130       5,377     9,038
Rationalization charges     —     2,376       16     2,376
Acquisition related costs     1,457     (40 )     2,210     196
Refinancing costs and loss on extinguishment of debt     —     20       13,862     290
COVID-19 pay     136     692       659     692
EBITDA, as adjusted   $ 149,848   $ 107,753     $ 265,655   $ 196,113

TopBuild Corp.
Acquisition Adjusted Net Sales (Unaudited)
(in thousands)                            
  2020   2021   Trailing Twelve
Months Ended
  Q3   Q4   Q1   Q2   June 30, 2021
Net Sales $ 697,223   $ 721,487   $ 742,798   $ 834,255   $ 2,995,763
Acquisitions proforma adjustment †   73,677     55,303     44,199     2,204     175,383
Net sales, acquisition adjusted $ 770,900   $ 776,790   $ 786,997   $ 836,459   $ 3,171,146
                             
                             
† Trailing 12 months sales have been adjusted for the pro forma effect of acquired branches

TopBuild Corp.
2021 Estimated Adjusted EBITDA Range (Unaudited)
(in millions)
           
  Twelve Months Ending December 31, 2021
  Low   High
Estimated net income $ 339.5   $ 363.6
Adjustments to arrive at estimated EBITDA, as adjusted:          
Interest expense and other, net   24.7     22.2
Income tax expense   119.3     127.8
Depreciation and amortization   70.6     67.5
Share-based compensation   10.9     8.9
Estimated EBITDA, as adjusted $ 565.0   $ 590.0
           



Posted on

IAA, Inc. Announces Second Quarter 2021 Financial Results

IAA, Inc. Announces Second Quarter 2021 Financial Results

Continued Strong Revenue and Net Income, Driven by Record Revenue Per Unit

Increases 2021 Outlook; Announces $400 Million Share Repurchase Authorization

WESTCHESTER, Ill.–(BUSINESS WIRE)–
IAA, Inc. (NYSE:IAA) today announced its financial results for the second quarter of fiscal 2021, which ended June 27, 2021.

John Kett, Chief Executive Officer and President, stated, “IAA delivered strong revenue and net income for the quarter, driven by record revenue per unit, fueled by our continued service and technology enhancements as well as favorable macro conditions, including exceptionally high used car pricing. In addition, volumes benefited from the increase in miles driven as a result of the gradual reopening of the economy. Our strong performance reflects the team’s sharp focus on our strategic initiatives, in addition to the healthy operating environment and operating leverage of our business.”

Mr. Kett continued, “We have increased our 2021 outlook to reflect our year-to-date performance as well as our view of the remainder of the year. As we mark the two-year anniversary of being an independent public company, I’m proud of our team’s accomplishments, and excited about our growth potential. We are committed to continuously innovating and providing a best-in-class experience for our buyers and sellers, and driving value for all our stakeholders.”

Key Second Quarter Measures:

(Dollars in millions, except per share amounts)

 

Quarter Ended

June 27, 2021

Quarter Ended

June 28, 2020

%

Change

Year to Date Ended

June 27, 2021

Year to Date Ended

June 28, 2020

%

Change

Revenues

$445.1

$296.8

50.0%

$868.6

$663.4

30.9%

Net Income

$82.9

$33.2

149.7%

$155.4

$77.9

99.5%

Adjusted Net Income1

$93.3

$36.6

154.9%

$171.2

$86.5

97.9%

Diluted EPS

$0.61

$0.25

144.0%

$1.15

$0.58

98.3%

Adjusted Diluted EPS1

$0.69

$0.27

155.6%

$1.27

$0.64

98.4%

Adjusted EBITDA1

$152.6

$78.9

93.4%

$285.8

$178.9

59.8%

1 Starting in 2021, we are no longer adding back COVID-19 costs in the calculation of Adjusted Net Income, Adjusted Diluted EPS and Adjusted EBITDA. As a result, our presentation of such metrics for fiscal 2021 may not be directly comparable to the corresponding metrics for prior periods, including fiscal 2020.

Highlights for the Second Quarter Ended June 27, 2021:

  • Consolidated revenues increased 50.0% to $445.1 million from $296.8 million in the second quarter of fiscal 2020. Foreign currency movements resulted in a benefit of $5.9 million to revenue for the quarter. Excluding this impact, organic revenue increased 48.0% to $439.2 million, consisting of an increase in volume of 22.9%, primarily due to higher vehicle miles traveled due to the reopening of the US economy, as well as higher revenue per unit of 20.4%. Service revenues increased 44.4% to $382.5 million from $264.8 million in the second quarter of fiscal 2020 due to the factors described above. Vehicle sales increased 95.6% to $62.6 million, compared to $32.0 million in the second quarter of fiscal 2020, primarily due to higher revenue per unit, higher volumes and the impact of an international provider switching from a consignment model to a purchased vehicle model in the fourth quarter of 2020. U.S. segment revenues increased by 47.8% to $393.0 million from $265.9 million in the second quarter of fiscal 2020. U.S. revenues were driven by higher revenue per unit, higher volumes and a slightly higher mix of vehicle sales. International segment revenues increased by 68.6% to $52.1 million from $30.9 million in the second quarter of fiscal 2020. International revenues increased primarily due to a higher mix of vehicle sales, higher revenue per unit, and slightly higher volume.
  • Gross profit, which is defined as total consolidated revenues minus cost of services and vehicle sales, and exclusive of depreciation and amortization, increased by 75.4% to $195.9 million from $111.7 million in the second quarter of fiscal 2020. The increase in gross profit was primarily due to higher revenue per unit, higher volume, and the benefits from our margin expansion plan. Gross margin in the quarter increased by 640 basis points to 44.0% from 37.6% in the prior year.
  • Selling, general and administrative (“SG&A”) expenses increased by 27.4% to $43.7 million from $34.3 million in the second quarter of fiscal 2020. Adjusted SG&A expenses were $43.3 million, an increase of 31.6% compared to Adjusted SG&A expenses of $32.9 million in the second quarter of fiscal 2020. Adjusted SG&A expenses increased primarily due to higher incentive-based compensation-related costs.
  • Interest expense was $21.9 million compared to $13.8 million in the second quarter of fiscal 2020. The increase in interest expense was due to the $10.3 million loss on early extinguishment of debt in conjunction with the refinancing of our credit facility in the quarter, partially offset by lower interest rates on floating rate debt.
  • The effective tax rate was 24.7% versus 24.4% in the second quarter of fiscal 2020.
  • Net income increased by 149.7% to $82.9 million, or $0.61 per diluted share, compared to $33.2 million, or $0.25 per diluted share, in the second quarter of fiscal 2020. Adjusted net income increased by 154.9% to $93.3 million, or $0.69 per diluted share, compared to $36.6 million, or $0.27 per diluted share, in the second quarter of fiscal 2020.
  • Adjusted EBITDA increased by 93.4% to $152.6 million from $78.9 million in the second quarter of fiscal 2020, primarily due to higher revenue per unit, higher volumes and the benefits from our margin expansion plan, partially offset by higher SG&A expenses. Adjusted EBITDA includes favorable foreign currency movements for the quarter of $1.0 million. Excluding this item, organic Adjusted EBITDA was $151.6 million, an increase of 92.1% compared to the second quarter of fiscal 2020.

Highlights for the Year-to-Date Ended June 27, 2021:

  • Consolidated revenues increased 30.9% to $868.6 million from $663.4 million in the prior year period. Foreign currency movements resulted in a benefit of $9.9 million to revenue for the year. Excluding this impact, organic revenue increased 29.4% to $858.7 million, consisting of an increase in volume of 3.5% primarily due to higher vehicle miles traveled in the second quarter due to the reopening of the US economy, as well as higher revenue per unit of 25.1%. Service revenues increased 24.1% to $742.9 million from $598.8 million in the prior year period due to the factors described above. Vehicle sales increased 94.6% to $125.7 million, compared to $64.6 million in the prior year period, primarily due to higher revenue per unit and higher volume, as well as the impact of an international provider switching from a consignment model to a purchased vehicle model in the fourth quarter of 2020. U.S. segment revenues increased by 28.0% to $751.3 million from $587.0 million in the prior year period. U.S. revenues were driven by higher revenue per unit, higher volumes and a slightly higher mix of vehicle sales. International segment revenues increased by 53.5% to $117.3 million from $76.4 million in the prior year period. International revenues increased primarily due to a higher mix of vehicle sales and higher revenue per unit, partially offset by slightly lower volume.
  • Gross profit, which is defined as total consolidated revenues minus cost of services and vehicle sales, and exclusive of depreciation and amortization, increased by 49.0% to $368.6 million from $247.3 million in the prior year period. The increase in gross profit was primarily due to higher revenue per unit, the benefits from our margin expansion plan, and slightly higher volume. Year-to-date, gross margin increased by 510 basis points versus the prior year to 42.4%.
  • SG&A expenses increased by 20.5% to $87.1 million from $72.3 million in the prior year period. Adjusted SG&A expenses were $82.7 million, an increase of 20.9% compared to Adjusted SG&A expenses of $68.4 million in the prior year period. Adjusted SG&A expenses increased primarily due to higher incentive-based compensation-related costs.
  • Interest expense was $34.9 million compared to $29.8 million in the prior year period. The increase in interest expense was due to the $10.3 million loss on early extinguishment of debt in conjunction with the refinancing of our credit facility in the second quarter, partially offset by lower interest rates on floating rate debt.
  • The effective tax rate was 24.9% versus 24.9% in the prior year period.
  • Net income increased by 99.5% to $155.4 million, or $1.15 per diluted share, compared to $77.9 million, or $0.58 per diluted share, in the prior year period. Adjusted net income increased by 97.9% to $171.2 million, or $1.27 per diluted share, compared to $86.5 million, or $0.64 per diluted share, in the prior year period.
  • Adjusted EBITDA increased by 59.8% to $285.8 million from $178.9 million in the prior year period, primarily due to higher revenue per unit and the benefits from our margin expansion plan, partially offset by higher SG&A expenses. Adjusted EBITDA includes favorable foreign currency movements of $1.6 million. Excluding this item, organic Adjusted EBITDA was $284.2 million, an increase of 58.9% over the prior year period.

Other Financial Highlights as of June 27, 2021:

  • Net Debt: $894.4 million
  • Leverage Ratio: 1.8x
  • Year-to-date Net Cash Provided by Operating Activities: $250.7 million
  • Year-to-date Free Cash Flow: $192.9 million
  • Liquidity: $801.5 million
  • Second quarter 2021 year-over-year vehicle inventory change: 16.9%
  • Completed the acquisition of Auto Exchange

Please refer to the accompanying financial tables for a reconciliation of Net Debt, Leverage Ratio and Free Cash Flow to U.S. GAAP.

Share Repurchase Authorization:

On August 2, 2021, the Company’s Board of Directors authorized a $400 million share repurchase plan. Under this program, the Company may repurchase up to $400 million in the aggregate of shares of its common stock on a discretionary basis from time to time through opportunistic open market repurchases, privately negotiated transactions, accelerated share repurchase transactions or other means, including under plans complying with the provisions of rule 10b5-1 of the Securities Exchange Act of 1934. The timing and amount of common stock to be repurchased will be subject to the discretion of the Company based upon market conditions and other opportunities the Company may have to deploy capital, and the authorization expires in five years. The share repurchase plan does not require the purchase of any minimum number of shares and may be suspended, modified or discontinued at any time without prior notice.

Outlook:

For fiscal 2021 the Company now expects:

  • Organic revenue growth within a range of 20.0% – 24.0% from fiscal 2020 revenues of $1,384.9 million.
  • Organic Adjusted EBITDA growth within a range of 29.0% – 33.0% from fiscal 2020 Adjusted EBITDA of $398.5 million.
  • Interest expense, net, is expected to be in the range of $57.0 million – $59.0 million, including the $10.3 million loss on early extinguishment of debt in the second quarter.
  • Effective tax rate is expected to be in the range of 25.0% – 25.5%.
  • Depreciation and amortization is expected to be in the range of $82.0 million – $86.0 million.

The Company has not provided a reconciliation of organic revenue or organic Adjusted EBITDA outlook for fiscal 2021 to GAAP revenues or net income, respectively, the most directly comparable GAAP financial measures because, without unreasonable efforts, it is unable to predict with reasonable certainty the amount or timing of non-GAAP adjustments that are used to calculate organic revenue or organic Adjusted EBITDA, including but not limited to: in the case of organic revenue, (a) sales from acquired businesses recorded prior to the first anniversary of the acquisition and (b) the impact of foreign currency movements; and in the case of organic Adjusted EBITDA, (a) non-income, tax-related accruals, (b) severance, restructuring and other retention expenses, (c) the net loss or gain on the sale of assets or expenses associated with certain M&A, financing and other transactions, (d) acquisition costs, (e) certain professional fees, (f) other expenses that we do not believe are indicative of our ongoing operations, (g) gains and losses related to foreign currency exchange rates, (h) EBITDA from acquired businesses recorded prior to the first anniversary of the acquisition, and (i) the impact of foreign currency movements. These adjustments are uncertain, depend on various factors that are beyond our control and could have a material impact on revenues or net income for fiscal 2021.

Conference Call Information:

A conference call to discuss the second quarter fiscal 2021 financial results is scheduled for today, August 3, 2021, at 9:00 a.m. Eastern Time. Investors and analysts interested in participating in the call are invited to join a live audio webcast of the conference call. The webcast is available online at https://investors.iaai.com/.

A recorded replay of the conference call will be available within two hours of the conclusion of the call and can be accessed online at https://investors.iaai.com/ for one year.

About IAA, Inc.

IAA, Inc. (NYSE:IAA) is a leading global marketplace connecting vehicle buyers and sellers. Leveraging leading-edge technology and focusing on innovation, IAA’s unique platform facilitates the marketing and sale of total-loss, damaged and low-value vehicles for a full spectrum of sellers. Headquartered near Chicago in Westchester, Illinois, IAA has nearly 4,000 employees and more than 200 facilities throughout the U.S., Canada and the United Kingdom. IAA serves a global buyer base – located throughout over 170 countries – and a full spectrum of sellers, including insurers, dealerships, fleet lease and rental car companies, and charitable organizations. Buyers have access to multiple digital bidding and buying channels, innovative vehicle merchandising, and efficient evaluation services, enhancing the overall purchasing experience. IAA offers sellers a comprehensive suite of services aimed at maximizing vehicle value, reducing administrative costs, shortening selling cycle time and delivering the highest economic returns. For more information, visit IAAI.com and follow IAA on Facebook, Twitter, Instagram, YouTube and LinkedIn.

Forward-Looking Statements:Certain statements contained in this release include “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In particular, statements made that are not historical facts may be forward-looking statements and can be identified by words such as “should,” “may,” “will,” “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” and similar expressions. In this release, such forward-looking statements include statements regarding our fiscal 2021 outlook, expectations regarding revenue per unit and volume for fiscal 2021 and our growth potential. Such statements are based on management’s current expectations, are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially from the results projected, expressed or implied by these forward-looking statements. These risks and uncertainties include: uncertainties regarding ongoing surges of COVID-19 infections, including new more contagious and / or vaccine-resistant variants, and the impact on the duration and severity of the COVID-19 pandemic, and the measures taken to reduce its spread, including the availability, rate of public acceptance and efficacy of COVID-19 vaccines; the loss of one or more significant vehicle seller customers or a reduction in significant volume from such sellers; our ability to meet or exceed customers’ demand and expectations; significant current competition and the introduction of new competitors or other disruptive entrants in our industry; the risk that our facilities lack the capacity to accept additional vehicles and our ability to obtain land or renew/enter into new leases at commercially reasonable rates; our ability to effectively maintain or update information and technology systems; our ability to implement and maintain measures to protect against cyberattacks and comply with applicable privacy and data security requirements; our ability to successfully implement our business strategies or realize expected cost savings and revenue enhancements, including from our margin expansion plan; business development activities, including acquisitions and integration of acquired businesses; our expansion into markets outside the U.S. and the operational, competitive and regulatory risks facing our non-U.S. based operations; our reliance on subhaulers and trucking fleet operations; changes in used-vehicle prices and the volume of damaged and total loss vehicles we purchase; economic conditions, including fuel prices, commodity prices, foreign exchange rates and interest rate fluctuations; trends in new- and used-vehicle sales and incentives; and other risks and uncertainties identified in our filings with the Securities and Exchange Commission (the “SEC”), including under “Risk Factors” in our Form 10-K for the year ended December 27, 2020 filed with the SEC on February 22, 2021. Additional information regarding risks and uncertainties will also be contained in subsequent annual and quarterly reports we file with the SEC. The forward-looking statements included in this release are made as of the date hereof, and we undertake no obligation to publicly update or revise any forward-looking statement to reflect new information or events, except as required by law.

Non-GAAP Financial Information

We refer to certain financial measures that are not recognized under United States generally accepted accounting principles (“GAAP”). Please see “Note Regarding Non-GAAP Financial Information” and “Reconciliation of GAAP to Non-GAAP Financial Information” for additional information and a reconciliation of the non-GAAP financial measures to the most comparable GAAP financial measures.

IAA, Inc.

Consolidated Statements of Income

(Amounts in Millions, Except Per Share)

(Unaudited)

 

Three Months Ended

Six Months Ended

 

June 27, 2021

June 28, 2020

June 27, 2021

June 28, 2020

 

 

 

 

 

Revenues:

 

 

 

 

Service revenues

$

382.5

 

$

264.8

$

742.9

 

$

598.8

 

Vehicle sales

62.6

 

32.0

 

125.7

 

64.6

 

Total revenues

445.1

 

296.8

 

868.6

 

663.4

 

Operating expenses:

 

 

 

 

Cost of services

197.6

 

158.9

 

394.0

 

362.1

 

Cost of vehicle sales

51.6

 

26.2

 

106.0

 

54.0

 

Selling, general and administrative

43.7

 

34.3

 

87.1

 

72.3

 

Depreciation and amortization

20.5

 

19.6

 

40.3

 

42.1

 

Total operating expenses

313.4

 

239.0

 

627.4

 

530.5

 

Operating profit

131.7

 

57.8

 

241.2

 

132.9

 

Interest expense, net

21.9

 

13.8

 

34.9

 

29.8

 

Other (income) expense, net

(0.3

)

0.1

 

(0.7

)

(0.6

)

Income before income taxes

110.1

 

43.9

 

207.0

 

103.7

 

Income taxes

27.2

 

10.7

 

51.6

 

25.8

 

Net income

$

82.9

 

$

33.2

 

$

155.4

 

$

77.9

 

 

 

 

 

 

Net income per share:

 

 

 

 

Basic

$

0.61

 

$

0.25

 

$

1.15

 

$

0.58

 

Diluted

$

0.61

 

$

0.25

 

$

1.15

 

$

0.58

 

IAA, Inc.

Consolidated Balance Sheets

(Amounts in Millions)

(Unaudited)

 

June 27, 2021

 

December 27, 2020

Assets

 

 

 

 

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

282.1

 

 

$

232.8

 

Accounts receivable, net of allowances of $7.6 and $8.0

338.0

 

 

374.8

 

Prepaid consigned vehicle charges

50.7

 

 

53.3

 

Other current assets

30.9

 

 

31.1

 

Total current assets

701.7

 

 

692.0

 

 

 

 

 

Non-current assets

 

 

 

Operating lease right-of-use assets, net of accumulated amortization of $210.8 and $163.9

962.9

 

 

866.8

 

Property and equipment, net of accumulated depreciation of $503.2 and $481.9

281.0

 

 

259.8

 

Goodwill

546.7

 

 

542.3

 

Intangible assets, net of accumulated amortization of $525.9 and $504.3

154.4

 

 

150.6

 

Other assets

26.0

 

 

17.4

 

Total non-current assets

1,971.0

 

 

1,836.9

 

Total assets

$

2,672.7

 

 

$

2,528.9

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

Current liabilities

 

 

 

Accounts payable

$

98.6

 

 

$

122.6

 

Short-term right-of-use operating lease liability

86.3

 

 

78.1

 

Accrued employee benefits and compensation expenses

31.3

 

 

23.4

 

Other accrued expenses

63.4

 

 

54.4

 

Current maturities of long-term debt

—

 

 

4.0

 

Total current liabilities

279.6

 

 

282.5

 

 

 

 

 

Non-current liabilities

 

 

 

Long-term debt

1,135.6

 

 

1,248.0

 

Long-term right-of-use operating lease liability

927.8

 

 

836.6

 

Deferred income tax liabilities

71.3

 

 

65.7

 

Other liabilities

28.2

 

 

26.7

 

Total non-current liabilities

2,162.9

 

 

2,177.0

 

Stockholders’ equity

 

 

 

Total stockholders’ equity

230.2

 

 

69.4

 

Total liabilities and stockholders’ equity

$

2,672.7

 

 

$

2,528.9

 

IAA, Inc.

Consolidated Statements of Cash Flows

(Amounts in Millions)

(Unaudited)

 

 

Six Months Ended

 

 

June 27, 2021

  

June 28, 2020

Operating activities

  

 

 

 

Net income

 

$

155.4

 

 

$

77.9

 

Adjustments to reconcile net income to net cash provided by operating activities:

  

 

 

 

Depreciation and amortization

 

40.3

 

 

42.1

 

Operating lease expense

 

73.3

 

 

66.3

 

Stock-based compensation

 

5.4

 

 

4.5

 

Provision for credit losses

 

(0.2

)

 

3.6

 

Loss on extinguishment of debt

 

10.3

 

 

—

 

Amortization of debt issuance costs

 

1.9

 

 

2.0

 

Deferred income taxes

 

5.6

 

 

(1.5

)

Gain on disposal of fixed assets

 

(0.2

)

 

(0.1

)

Changes in operating assets and liabilities, net of acquisitions:

  

 

 

 

Operating lease payments

 

(69.7

)

 

(63.8

)

Accounts receivable and other assets

 

32.2

 

 

65.8

 

Accounts payable and accrued expenses

 

(3.6

)

 

20.5

 

Net cash provided by operating activities

  

250.7

 

 

217.3

 

 

 

 

 

 

Investing activities

  

 

 

 

Acquisition of business, net of cash acquired

 

(4.0

)

 

—

 

Purchases of property, equipment and computer software

 

(57.8

)

 

(22.1

)

Proceeds from the sale of property and equipment

 

0.4

 

 

0.1

 

Other

 

(1.3

)

 

—

 

Net cash used by investing activities

  

(62.7

)

 

(22.0

)

 

 

 

 

 

Financing activities

  

 

 

 

Net decrease in book overdrafts

 

—

 

 

(33.6

)

Proceeds from debt issuance

 

650.0

 

 

—

 

Payments of long-term debt

 

(774.0

)

 

(4.0

)

Deferred financing costs

 

(4.6

)

 

(2.7

)

Finance lease payments

 

(5.9

)

 

(7.5

)

Issuance of common stock under stock plans

 

0.4

 

 

1.1

 

Proceeds from issuance of employee stock purchase plan shares

 

0.8

 

 

—

 

Tax withholding payments for vested RSUs

 

(7.2

)

 

(8.0

)

Net cash used by financing activities

  

(140.5

)

 

(54.7

)

Effect of exchange rate changes on cash

 

1.8

 

 

(0.7

)

Net increase in cash and cash equivalents

  

49.3

 

 

139.9

 

Cash and cash equivalents at beginning of period

 

232.8

 

 

47.1

 

Cash and cash equivalents at end of period

 

$

282.1

 

 

$

187.0

 

Cash paid for interest, net

 

$

23.5

 

 

$

28.9

 

Cash paid for taxes, net

 

$

44.7

 

 

$

6.2

 

Note Regarding Non-GAAP Financial Information

This press release includes the following non-GAAP financial measures: organic revenue growth, Adjusted SG&A expenses, Adjusted net income, Adjusted earnings per share (“Adjusted EPS”), Adjusted earnings before interest, income taxes, depreciation and amortization (“Adjusted EBITDA”), organic Adjusted EBITDA, free cash flow, and leverage ratio (defined as Net Debt divided by latest twelve month’s (“LTM”) Adjusted EBITDA). These measures are reconciled to their most directly comparable GAAP financial measures as provided in “Reconciliation of GAAP to Non-GAAP Financial Information” below.

Each of the non-GAAP measures disclosed in this press release should be considered in addition to, and not as a replacement for or superior to, the comparable GAAP measure, and may not be comparable to similarly titled measures reported by other companies. Management uses these financial measures and key performance indicators to assess the Company’s financial operating performance, and webelieve that these measures provide useful information to investors by offering additional ways of viewing the Company’s results, as noted below.

  • Organic revenue growth is growth in GAAP revenue adjusted to exclude (a) sales from acquired businesses recorded prior to the first anniversary of the acquisition, and (b) the impact of foreign currency movements. We believe that this measure helps investors analyze revenue on a comparable basis versus the prior year.
  • Adjusted SG&A expense is a non-GAAP financial measure calculated as GAAP SG&A expenses further adjusted for items that management believes are not representative of ongoing operations, including, but not limited to, (a) non-income, tax-related accruals, (b) severance, restructuring and other retention expenses, (c) for periods prior to the first quarter of 2021, incremental costs and expenses associated with COVID-19, including cleaning services, cleaning supplies and personal protective equipment, (d) certain professional fees and (e) acquisition costs. We believe this measure helps investors understand the Company’s ongoing cost and expense structure and compare it to prior and future periods.
  • Adjusted net income and Adjusted EPS are non-GAAP financial measures calculated as net income further adjusted for items that management believes are not representative of ongoing operations including, but not limited to, (a) non-income, tax-related accruals, (b) severance, restructuring and other retention expenses, (c) for periods prior to the first quarter of 2021, incremental costs and expenses associated with COVID-19, including cleaning services, cleaning supplies and personal protective equipment, (d) the net loss or gain on the sale of assets or expenses associated with certain M&A, financing and other transactions, (e) acquisition costs, and (f) certain professional fees, as well as (g) gains and losses related to foreign currency exchange rates, (h) the amortization of acquired intangible assets, and (i) loss on extinguishment of debt, and further adjusted to reflect the tax impact of these items. We believe that these measures help investors understand the long-term profitability of our Company and compare our profitability to prior and future periods.
  • Adjusted EBITDA is a non-GAAP financial measure calculated as net income before income taxes, interest expense, and depreciation and amortization (“EBITDA”) and further adjusted for items that management believes are not representative of ongoing operations including, but not limited to, (a) non-income, tax-related accruals, (b) severance, restructuring and other retention expenses, (c) for periods prior to the first quarter of 2021, incremental costs and expenses associated with COVID-19, including cleaning services, cleaning supplies and personal protective equipment, (d) the net loss or gain on the sale of assets or expenses associated with certain M&A, financing and other transactions, (e) acquisition costs, and (f) certain professional fees, as well as (g) gains and losses related to foreign currency exchange rates. Organic Adjusted EBITDA is further adjusted to exclude (a) EBITDA from acquired businesses recorded prior to the first anniversary of the acquisition, and (b) the impact of foreign currency movements. We believe that these measures provide useful information regarding our operational performance because they enhance an investor’s overall understanding of our core financial performance and help investors compare our performance to prior and future periods.
  • Free cash flow is a non-GAAP measure defined as cash flows from operating activities less purchases of property, equipment and computer software. We believe that this measure helps investors understand our ability to generate cash without external financings, invest in our business, grow our business through acquisitions and return capital to shareholders. A limitation of free cash flow is that is does not consider the Company’s debt service requirements and other non-discretionary expenditures. As a result, free cash flow is not necessarily representative of cash available for discretionary expenditures.
  • Leverage ratio is a non-GAAP measure defined as Net Debt divided by LTM Adjusted EBITDA. Net Debt is defined as total debt less cash. LTM Adjusted EBITDA is defined as Adjusted EBITDA over the prior twelve month period. We believe these measures help investors understand our capital structure and level of debt compared to prior and future periods.

Reconciliation of GAAP to Non-GAAP Financial Information

IAA, Inc.

Reconciliation of Organic Revenue Growth

(Amounts in Millions)

(Unaudited)

 

 

Three Months Ended

June 27, 2021

vs.

June 28, 2020

 

Six Months Ended

June 27, 2021

vs.

June 28, 2020

 

 

 

 

 

Revenue Growth

 

$148.3

 

$205.2

Less:

 

 

 

 

Foreign currency impact

 

(5.9)

 

(9.9)

Organic Revenue Growth

 

$142.4

 

$195.3

IAA, Inc.

Reconciliation of Adjusted Selling, General and Administrative Expenses

(Amounts in Millions)

(Unaudited)

 

 

Three Months Ended

 

Six Months Ended

 

 

June 27, 2021

 

June 28, 2020

 

June 27, 2021

 

June 28, 2020

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

$

43.7

 

 

$

34.3

 

 

$

87.1

 

 

$

72.3

 

Less non-GAAP adjustments:

 

 

 

 

 

 

 

 

Non-income, tax related accrual

 

—

 

 

—

 

 

2.7

 

 

—

 

Retention / severance / restructuring

 

—

 

 

0.6

 

 

0.6

 

 

2.9

 

COVID-19 related costs

 

—

 

 

0.3

 

 

—

 

 

0.5

 

Professional fees

 

0.3

 

 

0.5

 

 

1.0

 

 

0.5

 

Acquisition costs

 

0.1

 

 

—

 

 

0.1

 

 

—

 

Adjusted selling, general and administrative expenses

 

$

43.3

 

 

$

32.9

 

 

$

82.7

 

 

$

68.4

 

IAA, Inc.

Reconciliation of Adjusted Net Income

(Amounts in Millions, Except Per Share)

(Unaudited)

 

 

Three Months Ended

  

Six Months Ended

 

 

June 27, 2021

  

June 28, 2020

  

June 27, 2021

  

June 28, 2020

 

 

 

 

 

 

 

 

 

Net Income

 

$

82.9

 

 

$

33.2

 

 

$

155.4

 

 

$

77.9

 

Add back non-GAAP adjustments

 

 

 

 

 

 

 

 

Loss on extinguishment of debt

 

10.3

 

 

—

 

 

10.3

 

 

—

 

Non-income, tax related accrual

 

—

 

 

—

 

 

2.7

 

 

—

 

Retention / severance / restructuring

 

—

 

 

0.6

 

 

0.6

 

 

2.9

 

COVID-19 related costs

 

—

 

 

0.3

 

 

—

 

 

0.5

 

Gain on sale of assets

 

—

 

 

—

 

 

(0.2

)

 

(0.1

)

Professional fees

 

0.3

 

 

0.5

 

 

1.0

 

 

0.5

 

Acquisition costs

 

0.1

 

 

—

 

 

0.1

 

 

—

 

Non-operating foreign exchange (gain) / loss

 

(0.3

)

 

0.2

 

 

(0.6

)

 

(0.5

)

Amortization of acquired intangible assets

 

3.2

 

 

3.5

 

 

6.4

 

 

9.4

 

Non-GAAP adjustments to income before income taxes

 

13.6

 

 

5.1

 

 

20.3

 

 

12.7

 

 

 

 

 

 

 

 

 

 

Income tax impact of Non-GAAP adjustments to income before income taxes

 

(3.4

)

 

(1.3

)

 

(5.1

)

 

(3.3

)

Discrete tax items

 

0.2

 

 

(0.4

)

 

0.6

 

 

(0.8

)

Non-GAAP adjustments to net income

 

10.4

 

 

3.4

 

 

15.8

 

 

8.6

 

Adjusted net income

 

$

93.3

 

 

$

36.6

 

 

$

171.2

 

 

$

86.5

 

 

 

 

 

 

 

 

 

 

GAAP diluted EPS

 

$

0.61

 

 

$

0.25

 

 

$

1.15

 

 

$

0.58

 

EPS impact of Non-GAAP Adjustments

 

0.08

 

 

0.02

 

 

0.12

 

 

0.06

 

Adjusted diluted EPS

 

$

0.69

 

 

$

0.27

 

 

$

1.27

 

 

$

0.64

 

 

Note: Amounts will not always recalculate due to rounding

IAA, Inc.

Reconciliation of Adjusted EBITDA and Organic Adjusted EBITDA

(Amounts in Millions)

(Unaudited)

 

 

Three Months Ended

  

Six Months Ended

 

 

June 27, 2021

  

June 28, 2020

  

June 27, 2021

  

June 28, 2020

 

 

 

 

 

 

 

 

 

Net income

 

$

82.9

 

 

$

33.2

 

$

155.4

 

 

$

77.9

 

Add: income taxes

 

27.2

 

 

10.7

 

 

51.6

 

 

25.8

 

Add: interest expense, net

 

21.9

 

 

13.8

 

 

34.9

 

 

29.8

 

Add: depreciation & amortization

 

20.5

 

 

19.6

 

 

40.3

 

 

42.1

 

EBITDA

 

152.5

 

 

77.3

 

 

282.2

 

 

175.6

 

Add back non-GAAP adjustments

 

 

 

 

 

 

 

 

Non-income, tax related accrual

 

—

 

 

—

 

 

2.7

 

 

—

 

Retention / severance / restructuring

 

—

 

 

0.6

 

 

0.6

 

 

2.9

 

COVID-19 related costs

 

—

 

 

0.3

 

 

—

 

 

0.5

 

Gain on sale of assets

 

—

 

 

—

 

 

(0.2

)

 

(0.1

)

Professional fees

 

0.3

 

 

0.5

 

 

1.0

 

 

0.5

 

Acquisition costs

 

0.1

 

 

—

 

 

0.1

 

 

—

 

Non-operating foreign exchange (gain) / loss

 

(0.3

)

 

0.2

 

 

(0.6

)

 

(0.5

)

Adjusted EBITDA

 

152.6

 

 

78.9

 

 

285.8

 

 

178.9

 

Currency movements

 

(1.0

)

 

—

 

 

(1.6

)

 

—

 

Organic Adjusted EBITDA

 

$

151.6

 

 

$

78.9

 

 

$

284.2

 

 

$

178.9

 

 

Note: Amounts will not always recalculate due to rounding

IAA, Inc.

Reconciliation of Adjusted LTM EBITDA

(Amounts in millions)

(Unaudited)

 

 

Quarter Ended

  

LTM Ended

 

 

9/27/20

  

12/27/20

  

3/28/21

  

6/27/21

  

6/27/21

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

52.8

 

 

$

64.1

 

 

$

72.5

 

 

$

82.9

 

 

$

272.3

 

Add: income taxes

 

18.1

 

 

18.3

 

 

24.4

 

 

27.2

 

 

88.0

 

Add: interest expense, net

 

13.3

 

 

12.9

 

 

13.0

 

 

21.9

 

 

61.1

 

Add: depreciation & amortization

 

19.4

 

 

19.6

 

 

19.8

 

 

20.5

 

 

79.3

 

EBITDA

 

103.6

 

 

114.9

 

 

129.7

 

 

152.5

 

 

500.7

 

Add back non-GAAP adjustments

 

 

 

 

 

 

 

 

 

 

Non-income, tax related accrual

 

—

 

 

—

 

 

2.7

 

 

—

 

 

2.7

 

Retention / severance / restructuring

 

0.1

 

 

—

 

 

0.6

 

 

—

 

 

0.7

 

COVID-19 related costs

 

0.2

 

 

0.3

 

 

—

 

 

—

 

 

0.5

 

Gain on sale of assets

 

(0.4

)

 

(0.2

)

 

(0.2

)

 

—

 

 

(0.8

)

Acquisition costs

 

—

 

 

—

 

 

—

 

 

0.1

 

 

0.1

 

Professional fees

 

0.1

 

 

0.8

 

 

0.7

 

 

0.3

 

 

1.9

 

Non-operating foreign exchange loss (gain)

 

0.2

 

 

—

 

 

(0.3

)

 

(0.3

)

 

(0.4

)

Adjusted EBITDA

 

$

103.8

 

 

$

115.8

 

 

$

133.2

 

 

$

152.6

 

 

$

505.4

 

 

Note: Amounts will not always recalculate due to rounding

IAA, Inc.

Reconciliation of Net Debt

(Amounts in Millions)

(Unaudited)

 

 

June 27, 2021

 

 

(Unaudited)

Term Loan

 

$

650.0

 

Senior Notes

 

500.0

 

Capital Leases

 

26.5

 

Total Debt

 

1,176.5

 

Less: Cash

 

282.1

 

Net Debt

 

$

894.4

 

IAA, Inc.

Reconciliation of Free Cash Flow

(Amounts in Millions)

(Unaudited)

 

 

Three Months Ended

  

Six Months Ended

 

 

June 27, 2021

  

June 28, 2020

  

June 27, 2021

  

June 28, 2020

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

$

129.4

 

 

$

120.0

 

 

$

250.7

 

 

$

217.3

 

Less: Purchases of property, equipment and computer software

 

(27.5

)

 

(11.5

)

 

(57.8

)

 

(22.1

)

Free cash flow

 

$

101.9

 

 

$

108.5

 

 

$

192.9

 

 

$

195.2

 

Media Inquiries:

Jeanene O’Brien

SVP Marketing and Communications

[email protected] | (708) 492-7328

Investor Inquiries:

Farah Soi/Caitlin Churchill

ICR

[email protected] | (203) 682-8200

Arif Ahmed

Vice President, Treasury

[email protected] | (708) 492-7257

KEYWORDS: United States North America Illinois

INDUSTRY KEYWORDS: Fleet Management Professional Services Aftermarket Automotive Insurance

MEDIA:

Posted on

KULR Technology Group Reports Preliminary Second Quarter 2021 Financial Results & Reminder of its Battery Solutions Day Event

Q2 Year-over-Year Revenue Increased Over 200% and First Half 2021 Year-over-Year Revenue Increased Over 250% as Company Expects Growth Momentum to Continue in 2021

SAN DIEGO, Aug. 03, 2021 (GLOBE NEWSWIRE) — KULR Technology Group, Inc. (NYSE American: KULR) (the “Company” or “KULR”), a leading developer of next-generation lithium-ion battery safety and thermal management technologies, today announced its unaudited preliminary financial results for the second quarter of 2021 ending June 30th, 2021.

The Company is also providing a reminder that KULR will host its first Battery Solutions Day on Tuesday September 21, 2021. Those interested in attending KULR’s Battery Solutions Day live, as well as receiving event updates, may subscribe for email notifications at [email protected].

Q2’21 Financial Highlights:

  • Revenue for the three months ended June 30, 2021 is estimated at $620,000, compared with $201,128 for the three months ended June 30, 2020
  • Gross profit for the three months ended June 30, 2021 is estimated at $180,000, compared with $156,394 for the three months ended June 30, 2020

H1’21 Financial Highlights:

  • Revenue for the six months ended June 30, 2021 is estimated at $1,030,000, compared with $278,628 for the six months ended June 30, 2020
  • Gross profit for the six months ended June 30, 2021 is estimated at $320,000, compared with $203,851 for the three months ended June 30, 2020

Cash Position and Proceeds:

Cash position increased to over $12,150,000 as of June 30, 2021, compared with $767,906 on June 30, 2020. This increase is mainly attributable to:

  • Gross proceeds of approximately $6.5M received from the registered direct offering completed on May 20, 2021; and
  • Gross proceeds of approximately $3.7M received in Q2’21 from the exercise of warrants to purchase an aggregate of 3,000,000 shares of common stock.

CEO Commentary:

“We expect strong year-over-year revenue growth for the rest of 2021, as we continue to build out our management team for mass market applications and scaled-up manufacturing,” said KULR CEO Michael Mo. “Our attention to targeting adjacent markets complementary to our established battery safety and thermal management products, such as recycling and end of battery life shipment logistics, is starting to show traction. Since we received the two Department of Transportation special permits towards the end of Q2, we received increasing customer interest in our safe shipping solutions and expect to see increased market penetration in subsequent quarters as a result of obtaining those much-coveted DoT permits. Our cash position is the strongest in the Company’s history with virtually no debt, while the entire KULR team is laser focused on the execution and delivery of the Company’s strategic growth initiatives with the goal of significantly increasing shareholder value in the quarters and years to come.”

About KULR Technology Group Inc.

KULR Technology Group Inc. (NYSE American: KULR) develops, manufactures and licenses next-generation carbon fiber thermal management technologies for batteries and electronic systems. Leveraging the company’s roots in developing breakthrough cooling solutions for NASA space missions and backed by a strong intellectual property portfolio, KULR enables leading aerospace, electronics, energy storage, 5G infrastructure, and electric vehicle manufacturers to make their products cooler, lighter and safer for the consumer. For more information, please visit www.KULRTechnology.com.

Safe Harbor Statement

This release does not constitute an offer to sell or a solicitation of offers to buy any securities of any entity. This release contains certain forward-looking statements based on our current expectations, forecasts and assumptions that involve risks and uncertainties. Forward-looking statements in this release are based on information available to us as of the date hereof. Our actual results may differ materially from those stated or implied in such forward-looking statements, due to risks and uncertainties associated with our business, which include the risk factors disclosed in our Form 10-K filed with the Securities and Exchange Commission on March 19, 2021. Forward-looking statements include statements regarding our expectations, beliefs, intentions, or strategies regarding the future and can be identified by forward-looking words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “should,” and “would” or similar words. All forecasts are provided by management in this release are based on information available at this time and management expects that internal projections and expectations may change over time. In addition, the forecasts are entirely on management’s best estimate of our future financial performance given our current contracts, current backlog of opportunities and conversations with new and existing customers about our products and services. We assume no obligation to update the information included in this press release, whether as a result of new information, future events or otherwise.

Media Contact:

Derek Newton
Head, Media Relations
Main: (786) 499-8998
[email protected]

Investor Relations:

Tom Colton or Matt Glover
Gateway Investor Relations
Main: (949) 574-3860
[email protected]



Posted on

Unitil Reports Second Quarter Earnings

HAMPTON, N.H., Aug. 03, 2021 (GLOBE NEWSWIRE) — Unitil Corporation (NYSE: UTL) (www.unitil.com) today announced Net Income was $2.7 million, or $0.18 in Earnings Per Share (EPS), for the second quarter of 2021, a decrease of $0.4 million in Net Income, or $0.03 per share, compared to the second quarter of 2020. For the second quarter of 2021, higher Gas and Electric Adjusted Margins (a non-GAAP measure) were more than offset by higher operating expenses compared to the same period in 2020. For the six months ended June 30, 2021, the Company reported Net Income of $21.6 million, or $1.44 per share, an increase of $3.3 million, or $0.21 per share, compared to the same six month period in 2020. The Company’s earnings in the first six months of 2021 reflect higher Gas and Electric Adjusted Margins (a non-GAAP measure), partially offset by higher operating expenses. The Company’s GAAP Gas and Electric Gross Margins for the second quarter of 2021 were $16.8 million and $17.9 million, respectively. For the six months ended June 30, 2021, the Company’s GAAP Gas and Electric Gross Margins were $56.4 million and $35.1 million, respectively.

“Robust economic conditions in our regions, as reflected in improving unemployment and strong housing markets, contributed to our solid results in the first half of 2021,” said Thomas P. Meissner, Jr., Unitil’s Chairman and Chief Executive Officer. “In the second quarter, we also announced our commitment to net-zero emissions by 2050, which highlights the Company’s focus on environmental stewardship while continuing to provide safe and reliable service for customers.”

Gas Adjusted Gross Margin (a non-GAAP measure1) was $25.0 million and $72.8 million in the three and six months ended June 30, 2021, respectively, increases of $2.1 million and $7.5 million, respectively, compared to the same periods in 2020. The increase in the three month period was driven by higher rates of $1.8 million and $0.3 million from the net favorable effect of customer growth and warmer weather on gas sales. The increase over the six month period was
_________________
1 The accompanying Supplemental Information more fully describes the non-GAAP measures used in this press release and includes a reconciliation of the non-GAAP measures to what the Company’s management believes are the most comparable GAAP measures. The Supplemental Information also includes a discussion of the changes in the most comparable GAAP measures for the periods presented.

driven by higher rates of $5.1 million and $2.4 million from the net favorable effect of customer growth, colder winter weather and warmer spring weather.

Gas therm sales increased 0.2% and 4.2% in the three and six month periods ended June 30, 2021, respectively, compared to the same periods in 2020. The increase in gas therm sales in the Company’s service areas reflects colder winter weather in the first quarter of 2021 compared to the same period in 2020, and customer growth. Based on weather data collected in the Company’s gas service areas, on average there were 2.1% more Effective Degree Days (EDD) in the first six months of 2021 compared to the same period in 2020, although 6.4% fewer EDD compared to normal. The Company estimates weather-normalized gas therm sales, excluding decoupled sales, increased 2.4% in the first six months of 2021 compared to the same period in 2020. As of June 30, 2021, the number of gas customers served increased by 1,200 over the previous year.

Electric Adjusted Gross Margin (a non-GAAP measure1) was $24.3 million and $48.0 million in the three and six months ended June 30, 2021, respectively, increases of $1.9 million and $2.5 million, respectively, compared with the same periods in 2020. The increase in the three month period was driven by higher rates of $1.0 million and $0.9 million from the favorable effects of customer growth and warmer early summer weather. The increase over the six month period was driven by higher rates of $1.0 million and $1.5 million from the favorable effects of customer growth, colder winter weather and warmer early summer weather.

Total electric kilowatt-hour (kWh) sales increased 5.7% and 3.0%, respectively in the three and six month periods ended June 30, 2021 compared to the same periods in 2020. Sales to Residential customers decreased 2.5% and increased 2.8%, respectively, in the three and six month periods ended June 30, 2021 compared to the same periods in 2020. Sales to Commercial and Industrial (C&I) customers increased 11.9% and 3.1%, respectively, in the three and six month periods ended June 30, 2021 compared to the same periods in 2020. The changes in sales to Residential customers reflects customer growth, the positive effects of colder winter weather, warmer early summer weather, and lower Residential electric sales as the economy continues to fully and safely reopen. The increase in sales to C&I customers reflects customer growth and increased usage due to improving economic conditions. Based on weather data collected in the Company’s electric service areas, on average there were 36.1% more Cooling Degree Days (CDD) in the first six months of 2021 compared to the same period in 2020. As of June 30, 2021, the number of electric customers served has increased by 876 over the previous year.

Operation and Maintenance (O&M) expenses increased $2.9 million and $2.0 million in three and six months ended June 30, 2021, respectively, compared to the same periods in 2020. The increase in the three month period reflects higher labor costs of $1.2 million, higher utility operating costs of $1.1 million, and higher professional fees of $0.6 million. The increase in the six month period reflects higher utility operating costs of $1.4 million, higher labor costs of $0.4 million, and higher professional fees of $0.2 million.

Depreciation and Amortization expense increased $1.3 million and $2.7 million in the three and six months ended June 30, 2021, respectively, compared to the same periods in 2020. These increases primarily reflect additional depreciation associated with higher levels of utility plant in service.

Taxes Other Than Income Taxes increased $0.1 million, or 1.6%, for the three months ended June 30, 2021 compared to the same period in 2020, reflecting higher local property taxes on higher utility plant in service. For the six months ended June 30, 2021, Taxes Other Than Income Taxes decreased $0.2 million, or 1.6%, compared to the same period in 2020, reflecting lower payroll taxes, partially offset by higher local property taxes on higher utility plant in service.

Interest Expense, Net increased $0.4 million and $0.9 million, respectively, in the three and six months ended June 30, 2021, compared to the same periods in 2020, reflecting higher interest on long-term debt, partially offset by lower rates on lower levels of short-term debt.

Other Expense (Income), Net decreased $0.3 million and $0.5 million, respectively for the three and six months ended June 30, 2021 compared to the same periods in 2020, reflecting lower retirement benefit and other costs.

Federal and State Income Taxes increased $1.8 million for the six months ended June 30, 2021, respectively, compared to the same period in 2020, reflecting higher pre-tax earnings in the current period.

At its January 2021, April 2021 and July 2021 meetings, the Unitil Corporation Board of Directors declared quarterly dividends on the Company’s common stock of $0.38 per share. These quarterly dividends result in a current effective annualized dividend rate of $1.52 per share, representing an unbroken record of quarterly dividend payments since trading began in Unitil’s common stock.

The Company’s earnings are seasonal and are typically higher in the first and fourth quarters when customers use natural gas for heating purposes.

The Company will hold a quarterly conference call to discuss second quarter 2021 results on Tuesday, August 3, 2021, at 10:00 a.m. Eastern Time. This call is being webcast. This call, financial and other statistical information contained in the Company’s presentation on this call, and information required by Regulation G regarding non-GAAP financial measures can be accessed in the Investor Relations section of Unitil’s website, www.unitil.com.

About Unitil Corporation

Unitil Corporation provides energy for life by safely and reliably delivering natural gas and electricity in New England. We are committed to the communities we serve and to developing people, business practices, and technologies that lead to the delivery of dependable, more efficient energy. Unitil Corporation is a public utility holding company with operations in Maine, New Hampshire and Massachusetts. Together, Unitil’s operating utilities serve approximately 107,100 electric customers and 85,600 natural gas customers. Other subsidiaries include Usource, Unitil’s non-regulated business segment, which the Company divested in the first quarter or 2019. For more information about our people, technologies, and community involvement please visit www.unitil.com.

Forward-Looking Statements

This press release may contain forward-looking statements. All statements, other than statements of historical fact, included in this press release are forward-looking statements. Forward-looking statements include declarations regarding Unitil’s beliefs and current expectations. These forward-looking statements are subject to the inherent risks and uncertainties in predicting future results and conditions that could cause the actual results to differ materially from those projected in these forward-looking statements. Some, but not all, of the risks and uncertainties include the following: unforeseen or changing circumstances, which could adversely affect the reduction of company-wide direct greenhouse gas emissions; the COVID-19 pandemic, which could adversely impact the Company’s business, including by disrupting the Company’s employees’ and contractors’ ability to provide ongoing services to the Company, by reducing customer demand for electricity or natural gas, or by reducing the supply of electricity or natural gas; Unitil’s regulatory environment (including regulations relating to climate change, greenhouse gas emissions and other environmental matters); fluctuations in the supply of, the demand for, and the prices of, gas and electric energy commodities and transmission and transportation capacity and Unitil’s ability to recover energy supply costs in its rates; customers’ preferred energy sources; severe storms and Unitil’s ability to recover storm costs in its rates; general economic conditions; variations in weather; long-term global climate change; Unitil’s ability to retain its existing customers and attract new customers; increased competition; and other risks detailed in Unitil’s filings with the Securities and Exchange Commission.   These forward looking statements speak only as of the date they are made. Unitil undertakes no obligation, and does not intend, to update these forward-looking statements.

For more information please contact:                                                                                                          

Todd Diggins – Investor Relations Alec O’Meara – Media Relations
Phone: 603-773-6504 Phone: 603-773-6404
Email:  [email protected] Email:  [email protected]

                             

Selected financial data for 2021 and 2020 is presented in the following table:

 
Unitil Corporation – Condensed Consolidated Financial Data
(Millions, except Per Share data)(Unaudited)
 
  Three Months Ended June 30,   Six Months Ended June 30,
  2021 2020 Change   2021 2020 Change
                           
Gas Therm Sales:                          
Residential     8.1     9.4     (13.8%)         31.7     31.5          0.6%  
Commercial/Industrial     36.4     35.0     4.0%         108.0     102.6          5.3%  
Total Gas Therm Sales     44.5     44.4     0.2
% 		        139.7     134.1          4.2%  
                           
Electric kWh Sales:                          
Residential     149.5     153.3        (2.5%)         341.7     332.4           2.8%  
Commercial/Industrial     224.0     200.1        11.9%         455.9     442.0           3.1%  
Total Electric kWh Sales     373.5     353.4        5.7%         797.6     774.4           3.0%  
  
                           
Gas Revenues   $ 40.0   $ 33.7   $ 6.3       $ 118.7   $ 103.9   $ 14.8  
Cost of Gas Sales     15.0     10.8     4.2         45.9           38.6             7.3  
Gas Adjusted Gross Margin     25.0     22.9     2.1         72.8     65.3     7.5  
                           
Electric Revenues     56.6     50.2     6.4         116.7     110.4              6.3  
Cost of Electric Sales     32.3     27.8     4.5         68.7     64.9               3.8  
Electric Adjusted Gross Margin     24.3     22.4     1.9         48.0     45.5              2.5  
                           
Total Adjusted Gross Margin:     49.3     45.3     4.0         120.8     110.8     10.0  
                           
Operation & Maintenance Expenses     17.5     14.6    
2.9		         34.5     32.5     2.0  
Depreciation & Amortization     14.8     13.5     1.3         29.7     27.0                2.7  
Taxes Other Than Income Taxes     6.2     6.1              0.1         12.4     12.6     (0.2 )
Other Expense (Income), Net     1.1     1.4     (0.3 )       2.4     2.9               (0.5 )
Interest Expense, Net     6.3     5.9             0.4         13.0     12.1     0.9  
Income Before Income Taxes     3.4     3.8     (0.4 )       28.8           23.7     5.1  
Provision for Income Taxes     0.7     0.7     —         7.2     5.4     1.8  
Net Income   $ 2.7   $ 3.1   $ (0.4 )     $ 21.6   $ 18.3   $       3.3  
                           
Earnings Per Share   $ 0.18   $ 0.21   $ (0.03 )     $ 1.44   $ 1.23   $ 0.21  

Supplemental Information

The Company analyzes operating results using Gas and Electric Adjusted Gross Margins, which are non-GAAP measures. Gas Adjusted Gross Margin is calculated as Total Gas Operating Revenue less Cost of Gas Sales. Electric Adjusted Gross Margin is calculated as Total Electric Operating Revenues less Cost of Electric Sales. The Company’s management believes Gas and Electric Adjusted Gross Margins provide useful information to investors regarding profitability. Also the Company’s management believes Gas and Electric Adjusted Gross Margins are important measures to analyze revenue from the Company’s ongoing operations because the approved cost of gas and electric sales are tracked, reconciled and passed through directly to customers in gas and electric tariff rates; resulting in an equal and offsetting amount reflected in Total Gas and Electric Operating Revenue.

In the following tables the Company has reconciled Gas and Electric Adjusted Gross Margin to GAAP Gross Margin, which we believe to be the most comparable GAAP measure. GAAP Gross Margin is calculated as Revenue less Cost of Sales, and Depreciation and Amortization. The Company calculates Gas and Electric Adjusted Gross Margin as Revenue less Cost of Sales. The Company believes excluding Depreciation and Amortization, which are period costs and not related to volumetric sales revenue, is a meaningful measure to inform investors of the Company’s profitability from gas and electric sales in the period.

Three Months Ended June 30, 2021 ($ millions)
           Non-Regulated  
  Gas Electric and Other Total
Total Operating Revenue $ 40.0   $ 56.6   $ —   $ 96.6  
Less: Cost of Sales   (15.0 )   (32.3 )   —     (47.3 )
Less: Depreciation and Amortization   (8.2 )   (6.4 )   (0.2 )   (14.8 )
GAAP Gross Margin   16.8     17.9     (0.2 )   34.5  
Depreciation and Amortization   8.2     6.4     0.2     14.8  
Adjusted Gross Margin $ 25.0   $ 24.3   $ —   $ 49.3  

Three Months Ended June 30, 2020 ($ millions)
      Non-Regulated  
  Gas Electric and Other Total
Total Operating Revenue $ 33.7   $ 50.2   $ —   $ 83.9  
Less: Cost of Sales   (10.8 )   (27.8 )   —     (38.6 )
Less: Depreciation and Amortization   (7.4 )   (5.9 )   (0.2 )   (13.5 )
GAAP Gross Margin           15.5               16.5     (0.2 )   31.8  
Depreciation and Amortization             7.4     5.9     0.2     13.5  
Adjusted Gross Margin $ 22.9   $      22.4   $     —   $ 45.3  

Six Months Ended June 30, 2021 ($ millions)
           Non-Regulated  
  Gas Electric and Other Total
Total Operating Revenue $ 118.7   $ 116.7   $ —   $ 235.4  
Less: Cost of Sales   (45.9 )   (68.7 )   —     (114.6 )
Less: Depreciation and Amortization   (16.4 )   (12.9 )   (0.4 )   (29.7 )
GAAP Gross Margin   56.4     35.1     (0.4 )   91.1  
Depreciation and Amortization   16.4     12.9     0.4     29.7  
Adjusted Gross Margin $ 72.8   $ 48.0   $ —   $ 120.8  

Six Months Ended June 30, 2020 ($ millions)
      Non-Regulated  
  Gas Electric and Other Total
Total Operating Revenue $ 103.9   $ 110.4   $    —   $ 214.3  
Less: Cost of Sales   (38.6 )   (64.9 )   —     (103.5 )
Less: Depreciation and Amortization   (14.8 )   (11.8 )   (0.4 )   (27.0 )
GAAP Gross Margin           50.5               33.7     (0.4 )   83.8  
Depreciation and Amortization           14.8              11.8                      0.4     27.0  
Adjusted Gross Margin $ 65.3   $ 45.5   $               —   $ 110.8  
                         

Gas GAAP Gross Margin was $16.8 million and $56.4 million in the three and six months ended June 30, 2021, respectively, increases of $1.3 million and $5.9 million, respectively, compared to the same periods in 2020. The increase in the three month period was driven by higher rates of $1.8 million, $0.3 million from the net favorable effect of customer growth and warmer weather, and higher depreciation and amortization of $0.8 million. The increase in the six month period was driven by higher rates of $5.1 million and $2.4 million from the net favorable effect of customer growth, colder winter weather and warmer spring weather, partially offset by higher depreciation and amortization of $1.6 million.

Electric GAAP Gross Margin was $17.9 million and $35.1 million in the three and six months ended June 30, 2021, respectively, increases of $1.4 million and $1.4 million, respectively, compared to the same periods in 2020. The increase in the three month period was driven by higher rates of $1.0 million and $0.9 million from the favorable effects of customer growth and warmer early summer weather, partially offset by higher depreciation and amortization of $0.5 million. The increase in the six month period was driven by higher rates of $1.0 million and $1.5 million from the favorable effects of customer growth, colder winter weather and warmer early summer weather, partially offset by higher depreciation and amortization of $1.1 million.



Posted on

Descartes Sets Date to Announce Second Quarter Fiscal 2022 Financial Results

WATERLOO, Ontario, Aug. 03, 2021 (GLOBE NEWSWIRE) — Descartes Systems Group (TSX: DSG) (Nasdaq:DSGX), the global leader in uniting logistics-intensive businesses in commerce, is scheduled to report its second-quarter fiscal 2022 financial results after market close on Wednesday, September 8, 2021.

Members of Descartes’ executive management team will host a conference call to discuss the company’s financial results at 5:00 p.m. ET on Wednesday, September 8. Designated numbers are +1 888 465-5079 for North America and +1 416 216-4169 for international, using Passcode 8565 668#.

The company will simultaneously conduct an audio webcast on the Descartes website at www.descartes.com/descartes/investor-relations. Phone conference dial-in or webcast log-in is required approximately 10 minutes beforehand.

Replays of the conference call will be available until September 15, 2021, at the following address: https://onlinexperiences.com/Launch/QReg/ShowUUID=C1CCDA2D-509A-4C16-895B-A474C924D607&LangLocaleID=1033 using Passcode 50205852#. An archived replay of the webcast will be available at www.descartes.com/descartes/investor-relations.

About Descartes Systems Group           
Descartes (Nasdaq: DSGX) (TSX:DSG) is the global leader in providing on-demand, software-as-a-service solutions focused on improving the productivity, performance and security of logistics-intensive businesses. Customers use our modular, software-as-a-service solutions to route, schedule, track and measure delivery resources; plan, allocate and execute shipments; rate, audit and pay transportation invoices; access global trade data; file customs and security documents for imports and exports; and complete numerous other logistics processes by participating in the world’s largest, collaborative multimodal logistics community. Our headquarters are in Waterloo, Ontario, Canada and we have offices and partners around the world. Learn more at www.descartes.com and connect with us on LinkedIn and Twitter.  

Descartes Investor Contact         
Laurie McCauley
(519) 746-6114 x202358
[email protected]



Posted on

Owens & Minor Reports 2nd Quarter Financial Results

Owens & Minor Reports 2nd Quarter Financial Results

  • Record Q2 Earnings: GAAP EPS of $0.87 and Adjusted EPS of $1.06
  • Revenue Growth of 38% year-over-year
  • Affirms previously announced 2021 and 2022 guidance

RICHMOND, Va.–(BUSINESS WIRE)–
Owens & Minor, Inc. (NYSE-OMI)today reported financial results for the second quarter of 2021, as summarized in the table below.

“We delivered a solid second-quarter, led by outstanding performance in both of our segments. Our results demonstrate the underlying strength of the Global Products segment, and another quarter of improved performance in the Global Solutions segment,” said Edward A. Pesicka, President & Chief Executive Officer of Owens & Minor. “Our business blueprint continues to be the framework that helps drive our results as we begin to return to a more typical operating environment and helps us to achieve our long-term financial targets.”

Pesicka added, “Our strong performance in the first half, and improved line of sight toward the remainder of 2021 allows us to maintain the range of our full-year guidance for adjusted EPS of $3.75 to $4.25 and adjusted EBITDA of $450 million to $500 million. In addition, we affirm our previously announced 2022 guidance.”

“I am immensely proud of what our teammates have accomplished as we continue to execute on our strategic priorities to deliver sustainable growth and value for all our stakeholders,” Pesicka concluded.

Financial Summary(1)

 

 

 

 

YTD

 

YTD

($ in millions, except per share data)

2Q21

 

2Q20

 

2021

 

2020

 

 

 

 

 

 

 

Revenue

$2,489

 

$1,808

 

$4,816

 

$3,930

 

 

 

 

 

 

 

Operating Income, GAAP

$96.9

 

$22.2

 

$243.6

 

$33.0

 

 

 

 

 

 

 

Adj. Operating Income, Non-GAAP

$115.5

 

$38.9

 

$278.2

 

$66.3

 

 

 

 

 

 

 

 

Income (Loss) from continuing operations, GAAP

$65.9

 

$0.2

 

$135.5

 

($8.7)

 

 

 

 

 

 

 

Adj. Net Income, Non-GAAP

$80.1

 

$12.5

 

$191.5

 

$14.9

 

 

 

 

 

 

 

Adj. EBITDA, Non-GAAP

$127.7

 

$52.1

 

$303.2

 

$92.7

 

 

 

 

 

 

 

 

Income (Loss) from continuing operations per share, GAAP

$0.87

 

–

 

$1.80

 

($0.14)

 

 

 

 

 

 

 

Adj. Net income per share, Non-GAAP(2)

$1.06

 

$0.20

 

$2.54

 

$0.24

 

(1) Financial results relate to continuing operations. Reconciliations of the differences between the non-GAAP financial measures presented in this release and their most directly comparable GAAP financial measures are included in the tables below.

(2) Adjusted net income per share, Non-GAAP for 2Q21 was unfavorably impacted as compared to prior year by foreign currency translation in the amount of $0.02 and, favorably impacted by $0.03 for the 2021 year-to-date period.

2nd Quarter 2021 Highlights

  • Substantial increase in year-over-year second quarter earnings driven by revenue growth, market dynamics, product mix, and operating efficiencies

    • 117 basis point gross margin expansion
    • $77 million increase in adjusted operating income or 3 times the prior year
    • $10 million or 47% decrease in interest expense
    • Adjusted net income per share was over 5 times the prior year
  • 38% Revenue growth year-over-year driven by:

    • Effective response to the ongoing recovery of elective procedures
    • Higher sales of PPE
    • Pass-through of elevated glove costs
    • Continued strong performance in our Patient Direct business
  • Balance Sheet

    • Total net debt at the end of the quarter was $964 million
    • Leverage ratio of net debt to trailing twelve-months adjusted EBITDA was 1.8 times
  • Business Highlights

    • Launched the non-profit Owens & Minor Foundation supported by a $10 million initial endowment, committed to building healthier communities by supporting trusted charitable and civic organizations
    • Released inaugural ESG report outlining the Company’s focus and contributions in the areas of empowering teammates, caring for customers and communities, operating responsibly, and ensuring environmental stewardship
    • Announced a seven-month electric truck pilot program with Penske Logistics and Penske Truck Leasing for large-scale deliveries to hospitals
    • Hosted an Investor Day in May outlining long-term strategy to drive sustainable growth targeting adjusted EBITDA in excess of $650 million and adjusted earnings per share of more than $6.00 by 2026
    • Received two prestigious supplier awards from Premier, Inc. for exemplary pandemic response:

      • 2021 Supplier Legacy Award
      • COVID-19 Award for Most Supportive Supplier

Financial Outlook

The Company maintains its expectation of adjusted net income for 2021 to be in a range of $3.75 to $4.25 per share and adjusted EBITDA in the range of $450 million to $500 million. The Company also remains positioned to deliver its previously announced guidance for 2022.

Although the Company does provide guidance for adjusted net income per share and adjusted EBITDA (which are non-GAAP financial measures), it is not able to forecast the most directly comparable measures calculated and presented in accordance with GAAP without unreasonable effort. Certain elements of the composition of the GAAP amounts are not predictable, making it impracticable for the Company to forecast. Such elements include, but are not limited to restructuring and acquisition charges. As a result, no GAAP guidance or reconciliation of the Company’s adjusted net income per share guidance or adjusted EBITDA guidance is provided. For the same reasons, the Company is unable to assess the probable significance of the unavailable information, which could have a potentially significant impact on its future GAAP financial results. The outlook is based on certain assumptions that are subject to the risk factors discussed in the Company’s filings with the Securities and Exchange Commission (“SEC”).

Investor Conference Call for 2nd Quarter Financial Results

Owens & Minor executives will host a conference call at 8:30 a.m. EDT today, August 3, 2021, to discuss the results. Participants may access the call at 866-393-1604. The international dial-in number is 224-357-2191. A replay of the call will be available for one week by dialing 855-859-2056. The access code for the conference call, international dial-in and replay is 4479468. A webcast of the event will be available at www.owens-minor.com under the Investor Relations section.

Safe Harbor

This release is intended to be disclosure through methods reasonably designed to provide broad, non-exclusionary distribution to the public in compliance with the SEC’s Fair Disclosure Regulation. This release contains certain ”forward-looking” statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, the statements in this release regarding our expectations with respect to our 2021 and 2022 financial performance and our 2026 financial targets, as well as other statements related to the impact of COVID-19 on the Company’s results and operations and the Company’s expectations regarding the performance of its business. Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results in future periods to differ materially from those projected or contemplated in the forward-looking statements. Investors should refer to Owens & Minor’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC including the sections captioned “Cautionary Note Regarding Forward-Looking Statements” and “Item 1A. Risk Factors,” and subsequent annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K filed with or furnished to the SEC, for a discussion of certain known risk factors that could cause the Company’s actual results to differ materially from its current estimates. These filings are available at www.owens-minor.com. Given these risks and uncertainties, Owens & Minor can give no assurance that any forward-looking statements will, in fact, transpire and, therefore, cautions investors not to place undue reliance on them. Owens & Minor specifically disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.

About Owens & Minor

Owens & Minor, Inc. (NYSE: OMI) is a global healthcare solutions company that incorporates product manufacturing, distribution support and innovative technology services to deliver significant and sustained value across the breadth of the industry – from acute care to patients in their home. Aligned to its Mission of Empowering Our Customers to Advance Healthcare™, more than 15,000 global teammates serve over 4,000 healthcare industry customers. A vertically-integrated, predominantly Americas-based footprint enables Owens & Minor to reliably supply its self-manufactured surgical and PPE products. This seamless value chain integrates with a portfolio of products representing 1,200 branded suppliers. Operating continuously since 1882 from its headquarters in Richmond, Virginia, Owens & Minor has grown into a FORTUNE 500 company with operations located across North America, Asia, Europe and Latin America. For more information about Owens & Minor, visit owens-minor.com, follow @Owens_Minor on Twitter and connect on LinkedIn at www.linkedin.com/company/owens-&-minor.

 

Owens & Minor, Inc.

Consolidated Statements of Operations (unaudited)

(dollars in thousands, except per share data)
 

 

Three Months Ended June 30,

 

2021

 

2020

Net revenue

$

2,489,460

 

 

$

1,807,719

 

Cost of goods sold

2,089,392

 

 

1,538,312

 

Gross margin

400,068

 

 

269,407

 

Distribution, selling and administrative expenses

294,096

 

 

241,734

 

Acquisition-related and exit and realignment charges

8,624

 

 

6,054

 

Other operating expense (income), net

464

 

 

(577

)

Operating income

96,884

 

 

22,196

 

Interest expense, net

11,540

 

 

21,605

 

(Gain) loss on extinguishment of debt

—

 

 

(1,856

)

Other expense (income), net

1,028

 

 

(2,696

)

Income (loss) from continuing operations before income taxes

84,316

 

 

5,143

 

Income tax provision (benefit)

18,420

 

 

4,982

 

Income (loss) from continuing operations, net of tax

65,896

 

 

161

 

Loss from discontinued operations, net of tax

—

 

 

(55,788

)

Net income (loss)

$

65,896

 

 

$

(55,627

)

 

 

 

 

Basic income (loss) per common share:

 

 

 

Income (loss) from continuing operations

$

0.90

 

 

$

—

 

Loss from discontinued operations

—

 

 

(0.91

)

Net income (loss)

$

0.90

 

 

$

(0.91

)

Diluted income (loss) per common share:

 

 

 

Income (loss) from continuing operations

$

0.87

 

 

$

—

 

Loss from discontinued operations

—

 

 

(0.91

)

Net income (loss)

$

0.87

 

 

$

(0.91

)

Owens & Minor, Inc.

Consolidated Statements of Operations (unaudited)

(dollars in thousands, except per share data)
 

 

Six Months Ended June 30,

 

2021

 

2020

Net revenue

$

4,815,994

 

 

$

3,930,412

 

Cost of goods sold

3,973,175

 

 

3,392,445

 

Gross margin

842,819

 

 

537,967

 

Distribution, selling and administrative expenses

586,796

 

 

495,782

 

Acquisition-related and exit and realignment charges

14,587

 

 

12,118

 

Other operating expense (income), net

(2,141

)

 

(2,886

)

Operating income

243,577

 

 

32,953

 

Interest expense, net

25,212

 

 

44,948

 

(Gain) loss on extinguishment of debt

40,433

 

 

2,271

 

Other expense (income), net

1,598

 

 

(1,977

)

Income (loss) from continuing operations before income taxes

176,334

 

 

(12,289

)

Income tax provision (benefit)

40,848

 

 

(3,541

)

Income (loss) from continuing operations, net of tax

135,486

 

 

(8,748

)

Loss from discontinued operations, net of tax

—

 

 

(58,203

)

Net income (loss)

$

135,486

 

 

$

(66,951

)

 

 

 

 

Basic income (loss) per common share:

 

 

 

Income (loss) from continuing operations

$

1.87

 

 

$

(0.14

)

Loss from discontinued operations

—

 

 

(0.96

)

Net income (loss)

$

1.87

 

 

$

(1.10

)

Diluted income (loss) per common share:

 

 

 

Income (loss) from continuing operations

$

1.80

 

 

$

(0.14

)

Loss from discontinued operations

—

 

 

(0.96

)

Net income (loss)

$

1.80

 

 

$

(1.10

)

Owens & Minor, Inc.

Condensed Consolidated Balance Sheets (unaudited)

(dollars in thousands)
 

 

June 30,

 

December 31,

 

2021

 

2020

Assets

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

45,424

 

 

$

83,058

 

Accounts receivable, net of allowances of $20,650 and $19,087

738,573

 

 

700,792

 

Merchandise inventories

1,530,367

 

 

1,233,751

 

Other current assets

87,709

 

 

118,264

 

Total current assets

2,402,073

 

 

2,135,865

 

Property and equipment, net of accumulated depreciation of $311,897 and $284,126

306,511

 

 

315,662

 

Operating lease assets

174,952

 

 

144,755

 

Goodwill

389,864

 

 

394,086

 

Intangible assets, net

221,223

 

 

243,351

 

Other assets, net

97,206

 

 

101,920

 

Total assets

$

3,591,829

 

 

$

3,335,639

 

Liabilities and equity

 

 

 

Current liabilities

 

 

 

Accounts payable

$

1,126,355

 

 

$

1,000,186

 

Accrued payroll and related liabilities

96,081

 

 

109,447

 

Other current liabilities

212,741

 

 

236,094

 

Total current liabilities

1,435,177

 

 

1,345,727

 

Long-term debt, excluding current portion

1,007,968

 

 

986,018

 

Operating lease liabilities, excluding current portion

148,016

 

 

119,932

 

Deferred income taxes

45,327

 

 

50,641

 

Other liabilities

107,322

 

 

121,267

 

Total liabilities

2,743,810

 

 

2,623,585

 

Total equity

848,019

 

 

712,054

 

Total liabilities and equity

$

3,591,829

 

 

$

3,335,639

 

Owens & Minor, Inc.

Consolidated Statements of Cash Flows (unaudited)

(dollars in thousands)
 

 

Six Months Ended June 30,

 

2021

 

2020

Operating activities:

 

 

 

Net income (loss)

$

135,486

 

 

$

(66,951

)

Adjustments to reconcile net income (loss) to cash provided by operating activities:

 

 

 

Depreciation and amortization

45,501

 

 

48,804

 

Share-based compensation expense

13,040

 

 

7,814

 

Loss on divestiture

—

 

 

65,472

 

Loss on extinguishment of debt

40,433

 

 

2,271

 

Provision for losses on accounts receivable

15,777

 

 

7,589

 

Deferred income tax (benefit) expense

(11,293

)

 

4,269

 

Changes in operating lease right-of-use assets and lease liabilities

826

 

 

(1,029

)

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

(57,256

)

 

37,154

 

Merchandise inventories

(298,294

)

 

107,083

 

Accounts payable

127,473

 

 

16,395

 

Net change in other assets and liabilities

(3,363

)

 

(76,289

)

Other, net

4,076

 

 

(2,125

)

Cash provided by operating activities

12,406

 

 

150,457

 

Investing activities:

 

 

 

Proceeds from divestiture

—

 

 

133,000

 

Additions to property and equipment

(14,630

)

 

(8,733

)

Additions to computer software

(4,051

)

 

(3,409

)

Proceeds from sale of property and equipment

22

 

 

69

 

Proceeds from cash surrender value of life insurance policies

—

 

 

6,032

 

Cash (used for) provided by investing activities

(18,659

)

 

126,959

 

Financing activities:

 

 

 

Proceeds from issuance of debt

574,900

 

 

150,000

 

Repayments under revolving credit facility

(69,900

)

 

(47,900

)

Repayments of debt

(523,140

)

 

(258,005

)

Financing costs paid

(12,868

)

 

(10,367

)

Cash dividends paid

(364

)

 

(311

)

Payment for termination of interest rate swaps

(15,434

)

 

—

 

Other, net

(17,982

)

 

(4,479

)

Cash used for financing activities

(64,788

)

 

(171,062

)

Effect of exchange rate changes on cash and cash equivalents

(1,718

)

 

5,412

 

Net (decrease) increase in cash, cash equivalents and restricted cash

(72,759

)

 

111,766

 

Cash, cash equivalents and restricted cash at beginning of period

134,506

 

 

84,687

 

Cash, cash equivalents and restricted cash at end of period (1)

$

61,747

 

 

$

196,453

 

Supplemental disclosure of cash flow information:

 

 

 

Income taxes paid, net of refunds

$

68,030

 

 

$

5,975

 

Interest paid

$

17,768

 

 

$

43,840

 

 

(1) Restricted cash as of June 30, 2021 represents $16.3 million held in an escrow account as required by the Centers for Medicare & Medicaid Services (CMS) in conjunction with the Bundled Payments for Care Improvement (BPCI) initiatives.

Owens & Minor, Inc.

Summary Segment Information (unaudited)

(dollars in thousands)
 

 

Three Months Ended June 30,

 

2021

 

2020

 

Amount

 

% of

consolidated

net revenue

 

Amount

 

% of

consolidated

net revenue

Net revenue:

 

 

 

 

 

 

 

Segment net revenue

 

 

 

 

 

 

 

Global Solutions

$

1,977,579

 

 

79.44

%

 

$

1,548,639

 

 

85.67

%

Global Products

688,568

 

 

27.66

%

 

370,401

 

 

20.49

%

Total segment net revenue

2,666,147

 

 

 

 

1,919,040

 

 

 

Inter-segment revenue

 

 

 

 

 

 

 

Global Products

(176,687

)

 

(7.10

)%

 

(111,321

)

 

(6.16

)%

Total inter-segment revenue

(176,687

)

 

 

 

(111,321

)

 

 

Consolidated net revenue

$

2,489,460

 

 

100.00

%

 

$

1,807,719

 

 

100.00

%

 

 

 

 

 

 

 

 

% of segment

% of segment

Operating income:

 

net revenue

 

 

 

net revenue

Global Solutions

$

18,470

 

 

0.93

%

 

$

(10,141

)

 

(0.65

)%

Global Products

95,327

 

 

13.84

%

 

51,774

 

 

13.98

%

Inter-segment eliminations

1,737

 

 

 

 

(2,772

)

 

 

Intangible amortization

(10,026

)

 

 

 

(10,611

)

 

 

Acquisition-related and exit and realignment charges

(8,624

)

 

 

 

(6,054

)

 

 

Consolidated operating income

$

96,884

 

 

3.89

%

 

$

22,196

 

 

1.23

%

 

 

 

 

 

 

 

 

Depreciation and amortization:

 

 

 

 

 

 

 

Global Solutions

$

9,888

 

 

 

 

$

11,065

 

 

 

Global Products

12,712

 

 

 

 

13,826

 

 

 

Consolidated depreciation and amortization

$

22,600

 

 

 

 

$

24,891

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures:

 

 

 

 

 

 

 

Global Solutions

$

6,024

 

 

 

 

$

2,931

 

 

 

Global Products

6,034

 

 

 

 

2,135

 

 

 

Discontinued operations

—

 

 

 

 

1,363

 

 

 

Consolidated capital expenditures

$

12,058

 

 

 

 

$

6,429

 

 

 

 

 

 

 

 

 

 

 

Owens & Minor, Inc.

Summary Segment Information (unaudited)

(dollars in thousands)
 

 

Six Months Ended June 30,

 

2021

 

2020

 

Amount

 

% of

consolidated

net revenue

 

Amount

 

% of

consolidated

net revenue

Net revenue:

 

 

 

 

 

 

 

Segment net revenue

 

 

 

 

 

 

 

Global Solutions

$

3,827,088

 

 

79.47

%

 

$

3,396,233

 

 

86.41

%

Global Products

1,347,318

 

 

27.98

%

 

761,593

 

 

19.38

%

Total segment net revenue

5,174,406

 

 

 

 

4,157,826

 

 

 

Inter-segment revenue

 

 

 

 

 

 

 

Global Products

(358,412

)

 

(7.45

)%

 

(227,414

)

 

(5.79

)%

Total inter-segment revenue

(358,412

)

 

 

 

(227,414

)

 

 

Consolidated net revenue

$

4,815,994

 

 

100.00

%

 

$

3,930,412

 

 

100.00

%

 

 

 

 

 

 

 

 

 

 

 

% of segment

 

 

 

% of segment

Operating income:

 

 

net revenue

 

 

 

net revenue

Global Solutions

$

27,362

 

 

0.71

%

 

$

(2,450

)

 

(0.07

)%

Global Products

258,915

 

 

19.22

%

 

70,345

 

 

9.24

%

Inter-segment eliminations

(8,061

)

 

 

 

(1,603

)

 

 

Intangible amortization

(20,052

)

 

 

 

(21,221

)

 

 

Acquisition-related and exit and realignment charges

(14,587

)

 

 

 

(12,118

)

 

 

Consolidated operating income

$

243,577

 

 

5.06

%

 

$

32,953

 

 

0.84

%

 

 

 

 

 

 

 

 

Depreciation and amortization:

 

 

 

 

 

 

 

Global Solutions

$

19,727

 

 

 

 

$

21,701

 

 

 

Global Products

25,774

 

 

 

 

27,103

 

 

 

Consolidated depreciation and amortization

$

45,501

 

 

 

 

$

48,804

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures:

 

 

 

 

 

 

 

Global Solutions

$

9,024

 

 

 

 

$

3,963

 

 

 

Global Products

9,657

 

 

 

 

5,152

 

 

 

Discontinued operations

—

 

 

 

 

3,027

 

 

 

Consolidated capital expenditures

$

18,681

 

 

 

 

$

12,142

 

 

 

Owens & Minor, Inc.

Net Income (Loss) per Common Share (unaudited)

(dollars in thousands, except per share data)
 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

2021

 

2020

 

2021

 

2020

Income (loss) from continuing operations, net of tax

$

65,896

 

 

$

161

 

 

$

135,486

 

 

$

(8,748

)

Loss from discontinued operations, net of tax

—

 

 

(55,788

)

 

—

 

 

(58,203

)

Net income (loss)

$

65,896

 

 

$

(55,627

)

 

$

135,486

 

 

$

(66,951

)

 

 

 

 

 

 

 

 

Weighted average shares outstanding – basic

72,818

 

 

61,128

 

 

72,474

 

 

60,819

 

Dilutive shares

2,987

 

 

—

 

 

2,791

 

 

—

 

Weighted average shares outstanding – diluted

75,805

 

 

61,128

 

 

75,265

 

 

60,819

 

 

 

 

 

 

 

 

 

Basic income (loss) per common share:

 

 

 

 

 

 

 

Income (loss) from continuing operations

$

0.90

 

 

$

—

 

 

$

1.87

 

 

$

(0.14

)

Loss from discontinued operations

—

 

 

(0.91

)

 

—

 

 

(0.96

)

Net income (loss)

$

0.90

 

 

$

(0.91

)

 

$

1.87

 

 

$

(1.10

)

 

 

 

 

 

 

 

 

Diluted income (loss) per common share:

 

 

 

 

 

 

 

Income (loss) from continuing operations

$

0.87

 

 

$

—

 

 

$

1.80

 

 

$

(0.14

)

Loss from discontinued operations

—

 

 

(0.91

)

 

—

 

 

(0.96

)

Net income (loss)

$

0.87

 

 

$

(0.91

)

 

$

1.80

 

 

$

(1.10

)

Owens & Minor, Inc.

GAAP/Non-GAAP Reconciliations (unaudited)

(dollars in thousands, except per share data)

The following table provides a reconciliation of reported operating income and income (loss) from continuing operations to non-GAAP measures used by management.

 

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

2021

 

2020

 

2021

 

2020

Operating income, as reported (GAAP)

 

$

96,884

 

 

$

22,196

 

 

$

243,577

 

 

$

32,953

 

Intangible amortization (1)

 

10,026

 

 

10,611

 

 

20,052

 

 

21,221

 

Acquisition-related and exit and realignment charges(2)

 

8,624

 

 

6,054

 

 

14,587

 

 

12,118

 

Operating income, adjusted (non-GAAP) (Adjusted Operating Income)

 

$

115,534

 

 

$

38,861

 

 

$

278,216

 

 

$

66,292

 

Operating income as a percent of net revenue (GAAP)

 

3.89

%

 

1.23

%

 

5.06

%

 

0.84

%

Adjusted operating income as a percent of net revenue (non-GAAP)

 

4.64

%

 

2.15

%

 

5.78

%

 

1.69

%

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations, as reported (GAAP)

 

$

65,896

 

 

$

161

 

 

$

135,486

 

 

$

(8,748

)

Intangible amortization (1)

 

10,026

 

 

10,611

 

 

20,052

 

 

21,221

 

Income tax (benefit) provision (6)

 

(2,411

)

 

430

 

 

(5,197

)

 

(2,831

)

Acquisition-related and exit and realignment charges(2)

 

8,624

 

 

6,054

 

 

14,587

 

 

12,118

 

Income tax (benefit) provision (6)

 

(2,073

)

 

245

 

 

(3,780

)

 

(1,616

)

(Gain) loss on extinguishment of debt (3)

 

—

 

 

(1,856

)

 

40,433

 

 

2,271

 

Income tax benefit (6)

 

—

 

 

(75

)

 

(10,477

)

 

(303

)

Other (4)

 

570

 

 

(2,909

)

 

1,140

 

 

(2,331

)

Income tax (benefit) provision (6)

 

(137

)

 

(118

)

 

(295

)

 

311

 

Tax adjustment (5)

 

(402

)

 

—

 

 

(402

)

 

(5,187

)

Income from continuing operations, adjusted (non-GAAP) (Adjusted Net Income)

 

$

80,093

 

 

$

12,543

 

 

$

191,547

 

 

$

14,905

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations per diluted common share, as reported (GAAP)

 

$

0.87

 

 

$

—

 

 

$

1.80

 

 

$

(0.14

)

Intangible amortization (1)

 

0.10

 

 

0.18

 

 

0.20

 

 

0.31

 

Acquisition-related and exit and realignment charges(2)

 

0.09

 

 

0.10

 

 

0.14

 

 

0.17

 

(Gain) loss on extinguishment of debt (3)

 

—

 

 

(0.03

)

 

0.40

 

 

0.03

 

Other (4)

 

0.01

 

 

(0.05

)

 

0.01

 

 

(0.04

)

Tax adjustment (5)

 

(0.01

)

 

—

 

 

(0.01

)

 

(0.09

)

Income from continuing operations per diluted common share, adjusted (non-GAAP) (Adjusted EPS)

 

$

1.06

 

 

$

0.20

 

 

$

2.54

 

 

$

0.24

 

Owens & Minor, Inc.

GAAP/Non-GAAP Reconciliations (unaudited), continued

(dollars in thousands, except per share data)

The following tables provide reconciliations of net income (loss) and total debt to non-GAAP measures used by management.

 

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

Trailing Twelve Months Ended

June 30, 2021

 

 

2021

 

2020

 

2021

 

2020

 

Net income (loss), as reported (GAAP)

 

$

65,896

 

 

$

(55,627

)

 

$

135,486

 

 

$

(66,951

)

 

$

232,308

 

Loss from discontinued operations, net of tax

 

—

 

 

55,788

 

 

—

 

 

58,203

 

 

—

 

Income tax provision (benefit)

 

18,420

 

 

4,982

 

 

40,848

 

 

(3,541

)

 

66,223

 

Interest expense, net

 

11,540

 

 

21,605

 

 

25,212

 

 

44,948

 

 

63,663

 

Intangible amortization (1)

 

10,026

 

10,611

 

 

20,052

 

21,221

 

 

40,320

 

Other depreciation and amortization (7)

 

12,575

 

 

13,492

 

 

25,448

 

 

26,793

 

 

50,501

 

EBITDA (non-GAAP)

 

118,457

 

 

50,851

 

 

247,046

 

 

80,673

 

 

453,015

 

Acquisition-related and exit and realignment charges (2)

 

8,624

 

 

6,054

 

 

14,587

 

 

12,118

 

 

40,221

 

(Gain) loss on extinguishment of debt (3)

 

—

 

 

(1,856

)

 

40,433

 

 

2,271

 

 

49,381

 

Other (4)

 

570

 

 

(2,909

)

 

1,140

 

 

(2,331

)

 

2,285

 

EBITDA, adjusted (non-GAAP) (Adjusted EBITDA)

 

$

127,651

 

 

$

52,140

 

 

$

303,206

 

 

$

92,731

 

 

$

544,902

 

 

 

 

June 30,

 

 

2021

Total debt, as reported (GAAP)

 

$

1,009,036

 

Cash and cash equivalents

 

45,424

 

Net debt (non-GAAP)

 

$

963,612

 

Trailing twelve-months EBITDA, adjusted (non-GAAP) (Adjusted EBITDA)

 

544,902

 

Leverage ratio of net debt to trailing twelve-months adjusted EBITDA

 

1.8

 

 

Owens & Minor, Inc.

GAAP/Non-GAAP Reconciliations (unaudited), continued

The following items have been excluded in our non-GAAP financial measures:

(1) Intangible amortization includes amortization of intangible assets established during purchase accounting for business combinations. These amounts are highly dependent on the size and frequency of acquisitions and are being excluded to allow for a more consistent comparison with forecasted, current and historical results and the results of our peers.

(2) There were no acquisition-related charges for the three and six months ended June 30, 2021 compared to $3.9 million and $8.1 million for the same periods of 2020, which consisted primarily of transition costs for the Halyard acquisition. Acquisition-related charges for the twelve months ended June 30, 2021 were $3.7 million, which consisted primarily of transition costs for the Halyard acquisition. Exit and realignment charges were $8.6 million and $14.6 million for the three and six months ended June 30, 2021 and consisted primarily of an increase in reserves associated with certain retained assets of Fusion5, IT restructuring charges and other costs related to the reorganization of our U.S. operations. Exit and realignment charges were $2.2 million and $4.0 million for the three and six months ended June 30, 2020 and consisted primarily of severance from reduction in force and other costs related to the reorganization of the U.S. commercial, operations and executive teams. Exit and realignment charges were $36.5 million for the twelve months ended June 30, 2021, which were associated with severance from reduction in workforce, restructuring charges related to our client engagement center, IT restructuring charges, loss on sale of certain Fusion5 assets, and other costs related to the reorganization of the U.S. operations and commercial teams.

(3) Loss on extinguishment of debt for the six months ended June 30, 2021 includes the write-off of deferred financing costs and third party fees associated with the debt financing in March 2021 of $15.3 million and amounts reclassified from accumulated other comprehensive loss as a result of the termination of our interest rate swaps of $25.1 million. (Gain) loss on extinguishment of debt for the three and six months ended June 30, 2020 primarily includes the write-off of deferred financing costs and third party fees, offset by the gain on extinguishment of debt related to the partial repurchase of our 2021 and 2024 Notes. Loss on extinguishment of debt for the twelve months ended June 30, 2021 includes the write-off of deferred financing costs and third party fees of $19.3 million, amounts reclassified from accumulated other comprehensive loss as a result of the termination of our interest rate swaps of $25.1 million, and a make-whole premium related to the extinguishment of our 2021 Notes of $5.0 million.

(4) Other includes interest costs and net actuarial losses related to our retirement plans for the three and six months ended June 30, 2021 and the twelve months ended June 30, 2021. Other includes interest costs and net actuarial losses related to our retirement plans of $0.6 million and $1.2 million for the three and six months ended June 30, 2020 and gain from the surrender of company-owned life insurance policies of $(3.5) million for the three and six months ended June 30, 2020.

(5) Includes tax adjustments associated with the estimated benefits under the Tax Cuts and Jobs Act and the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

(6) These charges have been tax effected in the preceding table by determining the income tax rate depending on the amount of charges incurred in different tax jurisdictions and the deductibility of those charges for income tax purposes.

(7) Other depreciation and amortization includes depreciation expense for property and equipment and amortization for capitalized computer software.

Use of Non-GAAP Measures

This earnings release contains financial measures that are not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). In general, the measures exclude items and charges that (i) management does not believe reflect Owens & Minor, Inc.’s (the “Company”) core business and relate more to strategic, multi-year corporate activities; or (ii) relate to activities or actions that may have occurred over multiple or in prior periods without predictable trends. Management uses these non-GAAP financial measures internally to evaluate the Company’s performance, evaluate the balance sheet, engage in financial and operational planning and determine incentive compensation.

Management provides these non-GAAP financial measures to investors as supplemental metrics to assist readers in assessing the effects of items and events on its financial and operating results and in comparing the Company’s performance to that of its competitors. However, the non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.

The non-GAAP financial measures disclosed by the Company should not be considered substitutes for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations to those financial statements set forth above should be carefully evaluated.

Chandrika Nigam, Director, Investor Relations, [email protected], 804-723-7556

KEYWORDS: United States North America Virginia

INDUSTRY KEYWORDS: Surgery Medical Devices Hospitals Health Medical Supplies

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